The Cost of HYPE, Learning to Invest Crypto with Magic: the Gathering (Part 2)

Welcome to Part 2 of asset learning from Magic: the Gathering! If you missed Part 1, be sure to check out my first post on introducing the basics of game asset trading.

This week I'll go through the lifecycle of a single card and the impact of hype on its price and use. Let's begin!

When a card is printed...

Every few months, a fully new set of 200-some-odd cards are introduced as a set. Players will be able to draft, invest, and/or use some of the individual cards in various competitive forms like “Standard” (only using the latest X sets) or “Modern” (using most cards from 200X). Although these print runs are mostly unlimited, there is an expectation that there is some ceiling on the amount that will circulate the market as it is wholly dependent on how many boxes are opened.

Cards also have predetermined rarities of 4 choices. The breakdown per box usually works as follows -

About 3.6 of each Common
About 1.35 of each Uncommon
0.6 per rare
0.3 per mythic

*All stats taken from legendary financier Saffron Olive

Before any card hits the market, it also is assigned a tentative predetermined price. This has somewhat to do with its labeled rarity but much more impactful is the HYPE that is caused around the card. Thousands of players will speculate on its tournament impact in dedicated forums and Reddit and this heavily influences pre-order pricing.

- The mythic planeswalker Saheeli Rai was a whopping $30 per copy upon printing! A few weeks after, the price nosedived to a mere $5.

Even more swaying is the opinion of professional players. A single rational article or even tweet will send the market scrambling to raise prices on what might be the next big thing. If someone who has had a decade or more experience in the professional game, their 2-cents must cost much more, no?

- World Champion Seth Manfield was one of many that pushed the prices back up with the printing of Felidar Sovereign, a potential combo piece with the aforementioned Saheeli.

Overall, 3rd-party sellers take on a conservative approach to pre-order pricing. They assume that any given card will command a decent amount of value with a full expectation that most prices will not sustain. This gives them a buffer zone of profit even when a few soar above prediction.

The Lifecycle of HYPE

As you can imagine, there are basically two ways the price can go from here- either DOWN because the expectations are not realized or UP when the card is used up for actual tournaments.

Unsurprisingly the trend is almost always downwards as there are very few ways to substantiate hype until real-world use. Even pros are notoriously bad at predicting the impact of a card for two main reasons -

1 – Much like any other market, the level of diverse demand is unforeseeable. Maybe the card will see extreme play in marginal formats. Maybe it will see tremendous love from casual “kitchen table” players. Maybe collectors love the art. Professional play is just one of many major factors that influence the actual use of a card.

2 – A card's use is heavily determined by the existence of other cards in the ecosystem. A tournament decklist can never be autonomously “good.” It's success plays off the weakness of other decks and the overall tournament “meta.” As such, a card can be incredible in theory but unless it fits into a substantial archetype and does well in the upcoming tournament scene, it has diminished value.

Hype also doesn't just exist at the very beginning. As new sets and cards are introduced to the cycle of play, new expectations will emerge. If a card seems like it will popular/widely-used a few months after release, the same rise will happen

- With the printing of Felidar and the introduction of a tournament dominating combo, the prince of Saheeli shot back up to $26 overnight.

My Takeaway for Crypto

Hype evidently also exists in the crypto world, especially now when blockchain's prospects seem so wide-reaching and impactful. It also doesn't hurt the world is just now turning it's focus on the financial gains of digital currency.

It isn't a secret that Initial Coin Offerings (ICOs) are all the rage right now. After Ethereum transformed a few thousands of dollars in millions this past spring, investors are waking up to major potential by utilizing unregulated volatility.

So now that you know how hype can work for physical assets - the same basis exists for Beanie Babies, cars, rare coins, stamps, etc. to a certain degree – you can protect yourself from falling into the trap of FOMO either during ICOs or when the price rises suddenly as it has done for so many cryptos during this time.

- Any asset can fall victim to hype cycles...

I did a post on GAMECREDITS a few weeks back and during their recent ICO process for MobileGO, it soared from ~$1 a credit to almost 5 at this point. Not to dismiss the company's progress, I believe this to be greatly bolstered by media hype and social variables, not so much technical ones. We've yet to see the credit actually in use and we as consumers have no real idea what one GAMECREDIT will be valued at in a month's time.

- Learn from Saheeli... There is a cost to hype.

Let me know what you think! How much do you think HYPE will affect the price of Steem in the coming months/years? Be sure to check in again next week for another GAME ASSET analysis. Steem on!

Previous “Investing Crypto like Magic: The Gathering”
1 – Part 1: How I Learned to Trade Crypto through Magic/MtG

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