Welcome to the MTGO Market Report as compiled by Matthew Lewis. This will be the final weekly report and it will cover the fundamental speculative strategies that anyone can use to build a MTGO portfolio and harvest tix from the digital Magic economy. Look for quarterly updates on these strategies beginning in October of 2018.
Redemption is the process by which digital sets are translated into paper sets. This mechanism ties the value of digital cards within the MTGO economy to paper cards in the real world, giving tangible value to digital objects. Its existence has profound effects on the MTGO economy, and understanding its impacts is essential to understanding how and why fundamental speculative strategies work in the MTGO economy. Ergo, set prices for both digital and paper are collected each week for the purpose of identifying value and pricing trends, all through the lens of redemption.
Below are the total set prices for all redeemable sets on MTGO. All prices are current as of August 13, 2018. The TCGplayer market and TCGplayer mid prices are the sum of each set's individual card prices on TCGplayer, either the market price or mid price respectively. Redeemable sets are highlighted in green and sets not available for redemption are highlighted in red.
All MTGO set prices this week are taken from GoatBot's website and all weekly changes are calculated relative to GoatBot's "full set" prices from the previous week. All monthly changes are also relative to the previous month's prices. Occasionally full set prices are not available, and so estimated set prices are used instead. Although Hour of Devastation (HOU), Amonkhet (AKH), Aether Revolt (AER), and Kaladesh (KLD) are no longer available for redemption, their prices will continue to be tracked while they are in Standard.
Foil Mythic Rares
If you've studied the MTGO economy long enough, you'll have noticed that foil mythic rares have strange prices relative to their nonfoil versions. You might have even realized that it's a good idea to buy foil mythic rares early in a set's release as they tend to go up in price over time. If you are curious about the genesis of the foil mythic rare strategy and some further theorizing, please read part one, part two and part three from September 2015. Although redemption on new sets has been shortened substantially since I wrote those articles, the experience I've gained in applying the foil mythic rare strategy has given me confidence that it still works. The foil mythic rare strategy is the peak of my analysis of the MTGO economy and is still a great strategy for players to lower their costs and for speculators to make consistent profits. Below is the algorithm for applying the strategy for any given newly released Standard set.
Opening the Position
Buy each foil mythic rare from a given set after it becomes available for Draft and Sealed Deck . The average per-card price will be in the 10- to 15-tix range. Recent average prices are 14.5 tix per foil mythic rare from Core Set 2019 (M19) and 13.3 tix from Dominaria (DAR). Do not avoid buying high-priced ones and do not buy extra of the cheap ones; it is difficult to predict which cards will rise in value, so making any guesses increases the riskiness of the strategy. The pool of value represented by each of the foil mythic rares together is what you want to bet on and not individual cards. Buy each and every one from the set as long as they are a part of the redeemable set – buy-a-box promos like Nexus of Fate are not part of redemption and should be ignored.
The next time to employ this strategy will be with the release of Guilds of Ravnica (GRN). The prerelease will be at the end of September, which will coincide with the start of sealed deck leagues on MTGO. Supply of foil mythic rares is a little thin on the first weekend so start looking for these once draft leagues open on Monday, October 1.
Closing the Position
For players, simply holding their copies of each foil mythic rare until the release of the next set is fine. In the week prior to the release of the next Standard set, exchange your foil versions for regular versions and save the remaining tix to buy the foil mythic rares from the next set. In this way, you will have each and every mythic rare to play with as soon as a set is released and you won't be bleeding value as drafters flood the market with their leftovers. Alternatively, be sure to sell your foil mythic rares at least two weeks before the end of redemption.
For speculators timing the sale of foil mythic rares requires a little more due diligence. A good guideline is when the summed buy price of the foil mythic rares is 75 to 80 percent of the foil set price. Recent examples include Rivals of Ixalan (RIX) peaking at 83 percent eight weeks after release and DAR also peaking at 83 percent, in its case six weeks after release. M19 has not yet peaked but is currently at 77 percent six weeks after release. Speculators must be sure to sell their position at least two weeks prior to the end of redemption. Redemption anchors this strategy and as the redemption window closes, there is a rush to the exits as the value in foil mythic rares dissipates.
The anticipated selling window for GRN foil mythic rares is between the middle of November and the start of December.
A recent example of this strategy being employed is DAR, where I bought five foil mythic rare sets for 997.6 tix at the end of April and I sold these sets for 1404.7, mostly in early June, for a net return of 407.1 tix, or about 41 percent. This is an exceptional return – Ixalan (XLN) and RIX netted lower returns in the fifteen to twenty-five percent range. At the time of writing, M19 is tracking to have similarly lower returns.
Caveats and Other Notes
If redemption ends, this strategy will no longer work and the value of foil mythic rares will be tied only to the value of the regular version.
If redemption is shortened again, both players and speculators will have to adjust accordingly. A redemption window as short as six weeks will make this strategy unsuitable for speculators, although players will still be able to preserve their tix by using this strategy.
If a given set contains Masterpieces, the foil mythic rare strategy will still work.
The strategy is becoming more widely known and understood, which means it's getting harder to buy large quantities of foil mythic rares. This is also reducing the profit potential for speculators. It's possible that the strategy becomes crowded enough to drive profits to zero or negative. For this reason, speculators should be cautious in deploying this strategy and should ensure that the average price of a foil mythic rare must not exceed 15 tix when purchased as a part of a set's mythic rares. Individual cards can be 30 tix or higher, but the average must not exceed 15 tix or the returns will be curtailed.
The next buying window for foil mythic rares will be at the end of September when Guilds of Ravnica (GRN) is released.
Full Set Strategy
For any new Standard set, prices decline over time as more cards enter the secondary market after they are opened in Draft. Demand from redeemers and Standard players will act to support prices, but the general trend for the price of a new set is lower. Eventually, prices become anchored around the equilibrium established by the fresh supply from drafters and the demand from redeemers and Standard players. This is when it's time to be a buyer: when prices are established and drafting of the set is coming to a close.
Once the following set is released, the price of cards from the set we are interested in have to be updated. By this I mean that the market has to figure out what price will balance supply and demand in the new equilibrium now that there is much less supply entering the market due to the end of draft leagues. The process of finding this equilibrium doesn't happen overnight; it takes some time for it to unfold. What we can observe in the historical data is that a set's price tends to drift higher after it is no longer being heavily opened in Draft. The full set strategy seeks to take advantage of this process.
Redemption is also a key factor here. Sets are guaranteed for redemption for fifteen weeks, starting about a month after a set is released. With new sets being released quarterly, this means that set prices will be supported after the set is no longer being heavily drafted and the new set is released. For example, M19 will be guaranteed for redemption until November 21, nearly two months after the release of GRN.
Opening the Position
Timing the bottom of full sets has been a little tricky historically in the two- or three-set blocks era, because the flow of supply of a given set in a block changes as the draft format changes. But the new single set draft structure has greatly simplified the matter. The price bottom for a new Standard set will occur in the last week or two of drafting and that is when it's time to be a buyer.
Look for M19 to bottom in the last two weeks of September. At this early stage, I am looking for a price bottom of 50 tix.
Closing the Position
The key for this strategy to be successful is to avoid holding on too long. Full sets are now inserted as prizes in Treasure Chests after a set is no longer being drafted, so there is a risk that set prices fall over time. The trick is to identify if a set has stopped rising in price. The recent Pro Tour pushed the price of DAR sets up substantially as Teferi, Hero of Dominaria featured heavily in one of the top Standard decks. This was an easy sell signal, since it's often correct to sell into hype and you should be looking for reasons to sell your full sets. Looking for reasons to not sell is a long-term losing strategy. Look to sell full sets four to eight weeks after a set is no longer being drafted.
DAR again proved to be an exceptional set for speculation. Four sets bought for 73.0 tix each on July 9 were sold for 95.4 tix on August 7, netting 22.4 tix per set or about 31 percent. RIX and XLN were more of a mixed bag and there were issues with redemption availability, as they both went out of stock in the store prior to the redemption cutoff date. XLN sets were bought in March at an average price of 59.7 tix and were sold in April at 68.8 tix, netting 8.7 tix per set or about 15 percent. RIX fared a little worse, as sets were bought an average of 63.3 tix and sold for 67.8 tix, netting 4.2 tix per set or about 7 percent.
Caveats and Other Notes
As always, redemption matters. If a set is out of stock in the store prior to the end of drafting, this will hurt the potential returns of this strategy.
A return to multiple sets in a draft format will significantly complicate this strategy. Do not engage in the full set strategy as described here if this occurs.
The idea behind this strategy is that a supply of boosters has built up in the MTGO economy as a result of the steady number of Limited players entering the Draft and Sealed Deck leagues. When players complete their leagues, boosters are awarded as prizes. Exceptional players will build up a stock of boosters over time.
As a result of having a slightly discounted tix-only entry fee for these leagues, the market price of boosters is determined by this alternative. The tix-only entry fee for Draft is 12 tix and for Sealed Deck it is 24 tix. When entering with boosters, you must also pay 2 tix (4 tix for Sealed Deck) on top of having the appropriate number of boosters in your collection. Thus, the market price of boosters is 12 tix minus 2 tix divided by 3 or 3.3 tix. The calculations for both Booster Draft and Sealed Deck return the same result.
The opportunity to speculate on boosters arises when draft formats switch over to the next set and demand for the old boosters craters. When players are no longer interested in playing in the old format, they try to sell their boosters for tix rather than shelling out cash for the new set. This generates a rapid price drop in the old boosters as bots slash their prices in response to the flood of supply, which also coincides with a steep drop in demand. Eventually, this process comes to an end as players look at the meager prices the bots are offering and decide that they would rather hold the boosters for the future.
This is the point when buying up the boosters in order to hold for the future is a good speculative strategy. It works because the price of a booster will have often fallen so far that it is substantially discounted compared to the MTGO store price, but more importantly, it will mean that entering the draft queues with these discounted boosters is much cheaper when compared to the tix only entry fee. For instance, if you had bought a draft set of DAR as soon as M19 was released, you would have paid about 6 tix for it. Combined with the 2 tix entry fee, the total cost to enter the DAR draft queue would have been only 8 tix, a 4 tix discount to the tix only entry fee. That's a strong incentive and can be good value for players who enjoy DAR draft.
The strategy works because players are impatient and the bots compete on price. Since players are impatient, they dump their boosters at a discount compared to their long-term value. Bots just want to buy and sell at high volume, but since the market for boosters is so competitive, prices drop quickly. Patient players and speculators will take advantage of this situation by giving up tix today at full value for the discounted boosters. After a month or two, value-conscious players will have migrated to the cheaper draft format after tiring of the new format. Eventually, prices rise as these players chew through the available supply of these older boosters.
Opening the Position
Once a new set is released and the previous set is relegated to the draft queues only, buy up draft sets of the older booster for 7 tix or less. Often the price of a draft set will dip below 6 tix. This can be a high volume speculative strategy (buying hundreds of booster is not difficult) so timing the precise bottom is not necessary. Be sure to wait for the leagues to finish and for the draft queues to start.
For M19, look to the first week of October for these boosters to hit their lowest price.
Closing the Position
The price target is 9 to 10 tix for a draft set but sometimes a draft set will exceed 10 tix and sometimes it will peak at 6 or 7 tix. Each set is different and has different demand due to varying popularity of the different draft formats as well as the value of the booster contents. DAR appears to be quite popular as a draft format and the prices for singles are quite high, so it might peak at over 10 tix for a draft set.
The other thing to keep in mind is that you want to close the position before the next set is released. Once the next set is released, the old set will get pushed out of the draft queues and will not be available for draft at all. At that point, the boosters lose their draft value and will only be valued by their contents, which is typically less than 1 tix. On top of that, Cube draft is a periodic event just prior to the release of a new set which takes interest away from Standard draft formats.
The expected selling window for M19 is the end of November and into early December. Ravnica Allegiance (RNA) will be released in January and December often features the Vintage Cube so you will want to have completely exited this strategy by the middle of December.
I am currently in the process of selling off my DAR draft sets, and the returns have been great so far. Between July 7 and July 11, I bought 128 draft sets for an average of 5.7 tix. As of this writing, I have sold 45 draft sets for an average of 8.6 tix each. The net return so far is 2.9 tix per draft set, or 50 percent. Having said that, XLN block was a slightly negative return on two hundred and fifty draft sets, meaning a lot of work buying and selling was done in order to ultimately lose tix in the end.
Caveats and Other Notes
A change back to two- or three-set blocks does not change this strategy. Boosters should always be purchased in draft sets as that is how they are consumed by players. Trying to pick out the relatively scarce boosters in a two or three set block is tricky and should be avoided lest the wrong booster be chosen.
Treasure Chests previously awarded boosters as part of the prizes and a reversion of this change would complicate the booster strategy and should be considered carefully.
Controlling your costs is critical to the success of this strategy. Moving into boosters too soon will substantially reduce your returns, particularly for unpopular draft sets. The key mistake I made with XLN block draft sets was to be a buyer when I thought they had reached a good price. If I had been more patient, a better entry point would have been visible and the strategy would have yielded some profits as opposed to a loss.
The relative popularity of the current and older draft formats matters. DAR draft was exceptionally popular which made XLN block draft a poor choice in the minds of most drafters. This severely curtailed the demand for XLN and RIX boosters relative to an average set.
Trade of the Week
For a complete look at my recent trades, please check out the portfolio. The portfolio will remain available for viewing and I will update transactions and returns related to the three strategies discussed today. Single card strategies will no longer be recorded in the portfolio.
Keep an eye out for the first quarterly MTGO Market Report coming in October 2018.