The Insanity of the CSGO Market Crash

By: Nicolas Leon Guzman

The market for CSGO skins lost two billion dollars in less than 24 hours. CSGO is a popular first person shooter game created by Valve. In CSGO players can get custom skins for their weapons and character models that look cool, they do not offer any advantages in game outside of being aesthetically pleasing. CSGO averages 900,000 players, so it’s a very popular game that has tournaments where the best teams compete for championship and fills stadiums to the brim.

Now the way to acquire these skins is through buying lootboxes with either in-game currency that you earn slowly by playing the game, or converting real life dollars to the in-game currency AKA Gambling. There is a rarity list for the skins ranging from common to immortal with the immortal skins having the highest value. Generally to get an immortal skin players have to be either A) be really lucky or B) sink thousands of real dollars into the game just to get the good ones. 

Once players have gathered immortal skins they typically start trading them with other players using third party platforms. The skins are bought and sold with real money with some going around a thousand dollars, and the rarest skin ever being worth a million dollars. Yes, someone paid a million dollars to own a skin. This market is very volatile and dangerous, but the overall CSGO market had higher growth than the S&P 500 from January to March of this year, so it provides a more appealing investment opportunity to the average gamer. Governments around the world have been seeing the rise of gambling destroying the youth in recent years and even though Valve insist that it’s not really their fault because players will go off their platform to sell these skins. President of Valve Gabe Newell stepped in before legal action took place and released an update patch. The update allows players to trade in a number of their common skins up to a random immortal skin. This means that there would be more rare skins out in the market causing their value to drop.

The average CSGO player loves this because it has become more accessible to get the skins they want. However, the players who invested in skins to make money are upset at Valve because their portfolio has drastically dropped in value. Also, Valve wants the economics of skin trading to shift toward their platform because before the update, they weren’t seeing any of the profits from third party marketplaces. By doing all this Valve has lessened gambling on their platform and also created a new cash flow where skins are cheaper to buy on their platform instead of others.