It was an auction. No reason to worry about initial price when it's hot item. Not to mention may not have been allowed to set a large initial price based on the rarity or level requirement of the item. Some games have restrictions like that, if it's a level 5 item you can't just mark it for 1 million gold etc.
Item itself wasn't great, it could be deemed a strategic resource for professional gamers but only 4 hours and only 20% bonus? You'd have to be very foolish to buy it especially at an insane price.
Considering he seemed to get all the materials from the starting area, and the poor effect I bet it's low level. It's only valuable because others don't know how to make it + the 'need' to be first in level etc.