BTC price rise incoming?
Altcoins being sold off could also be interpreted as an attempt to push up the price of BTC by buying BTC. The charts show that altcoins were sold for BTC as the BTC losses are high. We also see flows into Tether and other stable coins as expected. SBD is not included in these flows.
From the look at what is happening it appears that Bitcoin Cash drama has created uncertainty in the market which has spread. At the same time it does not seem sustainable and below are some reasons:
Mining costs clearly are not sustainable. This could be a normal filtering process where inefficient miners are simply priced out of the market but at $5000 or $4000 BTC isn't likely going to be profitable to mine unless difficulty reduces. Maybe some experienced miners can fill me on but it does not appear profitable.
On Steem SBD is below $1 and this too is not likely sustainable. I don't think SBD can stay below $1 for very long.
The cost to run many of the alt chains may reach a point where things become unsustainable. If that is the case then the technology will have to be improved and new incentive structures will have to be tested.
We are about at 10% debt to equity ratio now, which means that if STEEM falls any further SBD will no longer be convertible to $1 worth of STEEM. In that case there will be nothing pegging it to $1 and the price will fall accordingly.
At which point does the conversion stop working? At 20% ratio? Or 10%?
As soon as the ratio goes above 10% the conversion will convert to less than $1 of STEEM. Conversion will still work, but as the ratio increases the conversion rate will decrease.
Can the exchange rate at which the conversion happens change during the conversion? Suppose the debt rate is under 10% when the conversion starts. Can the exchange rate change in the middle of the conversion if the debt ratio climbs higher than 10% during the conversion?
Debt debt equity ratio is 7.866% now. Source: Steemworld.
That's because the STEEM price used is an average over the past 3.5 days. If the price stays where it is now for the next 3.5 days then the ratio will show ~10%.
Thanks a lot. A most useful conversation. Initiated conversion. Not betting on the price of STEEM going up in the next 3.5 days.
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