$2 Billion Down: The Biggest Market Crash in Counter-Strike History

(Updated 07/01/2026)

On October 23, Valve dropped an update that sent shockwaves through the CS2 market, arguably the most disruptive change since the game’s launch.

With the new feature, players can now craft a knife or gloves using five Covert weapons. The reason for the update is to make knife skins more accessible to people with lower funds.

However, this changed the CS market, as unpopular Covert skins were not useless anymore. Basic economics applies here: as supply goes up, prices fall; when demand rises, prices increase.

How This Update Affects the Skins?

The update caused an immediate surge in demand for Covert and even Classified skins, driving their prices upward. But with knives and gloves now craftable, their supply increased drastically — and their prices plummeted.

In the first minutes, the crafted knives were non-tradable, limiting them to cosmetic use. However, the condition was changed and the crafted knives became tradable, triggering the biggest market drop in CS2 history.

Just days after the CS2 Market Cap reached an all-time high of $6 billion, it lost over 50% of its value — around $3 billion — within hours.

This sudden drop sent traders into chaos, and the community reaction played a huge role in it. The idea behind this update was to move some amount of value from knives to covert skins, and Valve achieved exactly what it wanted.

Even after the trade ban of the crafted knives was over, a bigger crash never happened. On the contrary, the market started recovering, as Coverts gained more and more value. At this moment, on January 7, the market has almost recovered to its state before the update, proving to everyone that its strength.

Analytics speculate that Chinese traders quickly poured some money into buying the crafted knives to keep them from falling. And it seems to have helped, but only slightly.

Community Reaction

In response to the update, clever people saw an opportunity to make a profit.

A huge number of people started spending all their money on buying Covert and Classified skins, the results of which we can see right in the market. Some skin prices multiplied several times within hours.

While some bought in, others sold in panic.

Although initially not tradable, as soon as the crafted knives lost that feature, people foresaw the decline in knife prices. Along with the new supply source, knives started depreciating in value.

Ironically, that mass liquidation became one of the main drivers of the crash.

Right now, everyone is trying to find Covert skins, even the worst ones, with the hope of selling them for a higher price or getting a knife that was not available before.

What Is Happening Now?

Although we've seen such a huge fall in the Market Cap and some recovery, the market is still extremely volatile. Knife prices are falling, slowly but surely, while Covert skins still gain value.

At the moment, nothing in CS market is promised. Valve's purpose of this update was to make knives affordable to low-fund players and now they really are. The lowest priced knife at the moment is $68 in the Steam Market, and even lower in third-party marketplaces.

Unless Valve does something, knife prices will continue to go down, taking the Covert skins' prices down with them in the future.

What Is Expected In The Future

CS2 insider Gabe Follower suggests this could be Valve’s first move toward removing cases entirely and fully shifting to an Armory system. The next step was the removal of Rare Drop Pool cases from the weekly rewards. Despite the vital role of the cases to the community, many players believe that Valve are moving towards Terminals as the future of the skins.

Whether this is a short-term correction or the dawn of a new economy, one thing is certain — the CS2 market will never be the same again.