Tuesday, November 25, 2014

Analysis: PLEX Prices Are Falling

CCP recently announced that beginning January 1st, 2015, input broadcasting and input multiplexing (read: ISBoxing commands across multiple clients with one click) will be against the EULA.

The price of PLEX has been falling in light of this announcement. Why? I'll tell you.

ISBoxers PLEX multiple accounts to multibox at the same time. When ISBoxing becomes against the EULA, they will no longer be able to use those accounts for their original purpose. It is therefore likely that they will stop purchasing PLEX for those accounts, the demand for PLEX will fall and so will the price of PLEX in response.

But that is not what is causing the immediate price decrease. People with any sort of economic insight will foresee the demand decrease for PLEX and associated price decrease and will start trying to liquidate any PLEX that they might be holding on to, before they start losing ISK as the prices adjust. This is classic speculation at work.

Now, notably, as the price of PLEX drops, those who buy PLEX with real dollars and convert them to ISK will suddenly be receiving less ISK per PLEX than they used to. For some people, purchasing PLEX with real dollars will no longer be worth it and they will stop. This will reduce the supply of PLEX on the market, counterbalancing the impact of the decrease in demand.

What does this mean? It is almost certain that in the short to medium run, the quantity of PLEX on the market will decline. The impact on the price of PLEX is uncertain - in the immediate short run, prices will fall due to speculation and then demand declining. After that, the prices will stabilize at a new level that might be higher or lower than their initial value yesterday. I would imagine that the prices won't stabilize until after January 1st, when we see how the rest of the markets react to a lack of ISBoxers.

Buckle up folks, we're in for a bit of a ride.


  1. Good Analysis.

    The real question that's going determine how hard far the price crashes and how long it stays low is just how many PLEX are in stockpiles and how many will get dumped?

    1. Very true. Prices have dropped well over 70 million since the announcement, so it seems like people were desperate to get out of the market while they could.