RE: Post-Hardfork Steem - Calm Before the Storm?
IMO, the limited effect on price due to HF16 is a little bit managed by the largest stakeholders, but only a very little bit.
There's a big spectrum between powering down and selling (which is definitely going on) and powering down and dumping everything on the market at once. I think the whales all understand that they can't do the latter without tanking the price, and i think their restraint there is what has prevented a huge dip in prices.
That said, where we are price wise right now is not about supply. Its about demand, and it has been since well before HF16. Everything about steem's economic indicators indiactes this. Long periods of low volume and gradual price decline, punctuated by brief periods of high-volume and rapidly increasing price.
In a market like this, an increase in the money supply, provided its not accompanied by a panic, isn't going to have a big effect on market price. It will moderate some of the spikes (because greater market depth means greater resistance to rapid price change) , but its not really going to change anything fundamental about the direction the price is moving.
Which, right now, is down. I think there will be a rally eventually, but we are very far away from that. If i had to venure a guess, id say 10-15% declines weekly, probably for about 24 weeks. I see us hitting a bottom in the general neighborhood of .5 cents to just over a cent. Personally, i think this is a good thing. The platform can't work until theres better distribution, and there can't be better distribution unless the price goes way down. Its simply not worth it, at this point, for someone to go out of pocket to become a major stakeholder.
Once we get there, Depending on demand, and where the platform has gone and what it can offer users and investors, i can imagine a significant rally in the latter half of 2017. But the notion that we're going to get to a rally without going significantly below the ~10 cents record low is just incredibly optimistic.
That's definitely a more reasonable-sounding prediction. I'm always the shameless optimist so it's good to have people like you around as a counter-balance. :)
If it does go as low as you say, I'll definitely be buying more. I'm sure most of us here would agree that that would be a pretty sweet opportunity... actually, it would make sense to power-down and sell some now in order to have some bitcoin on hand to buy back in with a couple months later if/when the price drops as much as you're suggesting it could.
you are right about demand, and I am looking for the soon to be released steemit road-map to address the issues surrounding demand, with a clear plan for user growth and retention, and perhaps by February 2017 the implemented plan will increase demand
I think mid feb 2017 will be a big watershed. Its when the HF16 powerdowns will finish up, and its also when busy goes to open beta.
Its possible that well see a turnaround then, especially if the whales who decided to wait then have the option to cash out and elect not to. I think its more likely that well just see a decrease in the rate of decline. One of the realities of having a larger money supply is that by then, we're there is going to be a lot more inertia to overcome to change the direction price is moving.
Personally, i don't see the "roadmap" as really relevant, and i don't see user retention and growth as something that can happen in this organization from the top down. Ned and Dan are very smart people, but theyre not perfect, or in the bible. Everyone is bad at something, and bringing people on board is something that seems to be a weak suit of the management here.
Ned and Dan are not focused on the price of steem or what whales do. Dan is focused on scaleability, and Ned is focused on user growth and retention
(distribution). Your comment reads like someone who is very focused on the price of steem and the market, and that is not the focus at Steemit headquarters right now.
As far as the price of steem, anything less than 20 cents is a great buy, and if it stays that low for 3 more months, I will be buying tons of steem for sure
It is more than a little managed that ned and dan stopped powering down. They are the largest stakeholders. Others in the dev team are very large stakeholders and have stopped powering down to (I don't know how 'managed' that is, but ned and dan are plenty to describe the situation as managed).
This cuts both ways. To achieve this sort of distribution you also need selling and at very low prices it may not be worth selling for the largest stakeholders. All told I think you get much better redistribution at high prices with high demand than low prices with low demand. Of course, that isn't something you can choose.
If no one sees the point of selling below 5 cents or 10 cents or whatever, then the price won't go lower than that and you can absolutely hold the line and maintain price.
If almost no one sees the point, then you'll see precisely what you are describing. Sluggish volume and a relatively gradual downward trend.
That is to say, whales can build a dam of 10 cent asks or 5 cent asks or whatever, and refuse to sell below that level. But the dam will leak when as little guys pop up and want cash now and just accept the highest available bid (or pop up on the ask side and front run the whales). My gut tells me the system is too big to do anything about that leak. I don't see it being feasible to convince everyone to stop selling, or even almost everyone.
There are enough people on the platform that need the money (or are just willing to take the highest price they can get regardless) so that the volume that trickles past is what is going to move the price point. IN a low demand environment where 95% of the money isnt moving because the major holders don't want to sell, the market price is going to be set by the 5 percent who are selling.
You have a point though that there comes a point where its no longer worthwhile for the little guys to sell either, at a certain price point what they would get from selling their relatively small powerdowns and rewards is too trivial to be worth the effort. Or, to phrase it a little more positively, the upside potential of a rally far outweighs the immediate rewards of cashing out.
Its kind of chicken and egg. To get high prices and high demand, there needs to be a significant level of growth. And to get significant growth there has to be better distribution. Though, both of the previous two statements are purely my subjective opinion. Im sure there are many who would argue that we can have high prices and high demand with the current size of the ecosystem just due to market speculation.
The price would not trend lower if the small number of people who do continue to sell are matched by a small number of people who continue to buy. This would be low-volume constant (or nearly-constant) price and exactly what you see for a large number of 'zombie coins".
The point is not that volume would drop to zero, but the little guys or occasional whale towel thrown in, along with the usual trickle (e.g. from rewards) are not enough volume to accomplish distribution on a useful timescale. (And to the extent that it does, as I mentioned earlier, it will likely distribute coins to a small number of buyers, not a large number; in a low-volume, low-price environment, where would a large number of people with an interest in buying come from? Nowhere.)
Then IMO it is probably a good idea to just give up and conclude that launching in the manner this was launched was a fatal error, with one caveat. I don't see lower prices, or even reasonably stable prices, as aiding in distribution before this all becomes so old and leapfrogged by newer and better projects as to be irrelevant. The caveat concerns the steemit account, which both contains enough to meaningfully affect distribution and was intended to accomplish distribution regardless of price (mostly by giving away coins). If this is done effectively, and in a reasonably expedient manner, then the distribution can improve before price does.
I don't entirely agree that growth necessarily requires distribution first, but it does require something other than what has been done so far.
I articulated my point poorly. The point i was trying to make was that the powerdowns really don't have that much of an effect on price. I think its laudable for ned, dan and other major stakeholders to hold off (especially since it would avoid the perception that they changed the rules for their own benefit) but ultimately, i don't think it would make a ton of difference from a price perspective, unless they powered down and immediately dumped the power downs on the market for whatever chunk of the bid book they could get (and i take it as a given that none of them are reckless enough to do that).
Because the past six months gives what evidence for that assumption?
This is a misconception. The distribution problem is a perpetual one, even if we had a perfectly even distribution today , the issue still wouldn't be solved as the power would concentrated as price rises.
Regarding your price prediction, I doubt many whales would sell under 10 cents, unless they really need the money now or believe the price will not be higher than 10 cents in the future ( which is extremely unlikely)
No, its not. It isn't about more "even" distribution, its about having a sufficient number of major stake holders so that 3 or 4 people aren't deciding rewards by themselves, and we can actually benefit from the wisdom of the crowd. Until there's actually an opportunity for real investors, and not just ninjas, to have a real stake for a not insane amount of money, steemit, and the price of steem will founder.
And because steem is just so super awesome, when the whales decide that they want the price to be more than 10 cents, everyone will just line up to buy from them at whatever price they want.
Or, people won't be willing to pay, and we'll see exactly what were seeing now. Sluggish volume, low demand and steadily declining market price. Spoiler alert. Its the second one.
You seem to have the notion in your head that this is a sellers market. It isn't. What price the whales are willing to sell at is irrelevant.
And that number will be more and more insufficient as price and number of user rises. Which was my initial point.
Those with the most steem dictate the market.
Yes, and as i said originally, its not about "even" distribution. Its not about what percentage of the user pool controls what percentage of the steem power. Its about getting enough significant stakeholders so that 5 people don't control more than half of the steem power. 100 people controlling half of the steem power, or 500, is better than 5. Even if that 100 or 500 actually represented a far smaller percentage of the user pool than the 5, it would still be better. Especially if they were real, non-ninja investors.
That said:
If the number of users was rising (its not), then a higher price would be reasonable for the same stake. If steem had the same number of active users as facebook, id pony up the $500K to be the next smooth in a heartbeat.
That is to say: yes, if the number of users goes up, the price of steem will probably go up, but since the reach of the site has also gone up, then investors will be willing to pay a higher price for the same stake.
SO no, it wont always be a problem. It will only be a problem for precisely as long as steem overvalued enough so that no rational person would want to spend the money to have a significant amount of influence.
So how are they going to force people to buy steem? Theyre not. Theyll put asks on the books for (according to you) more than 10 cents, and theyll just sit there on the books and not get filled.
This ridiculous notion that people have to buy steem even though there is no rational reason for them to want to is a big part of the reason why were down about 98% from july. The pepole with the most steem will only get to dictate the market if they participate in the market. And theyll only get to participate in the market if people are willing to buy what theyre selling.
Also, if what youre saying was true (its not. In fact, its patently absurd) then the whales, those with the most steem, have dictated the market from $5 to .13 cents. Which seems kind of contrary to their interests.
100 will look tiny when hundreds of thousands of users use steemit. So in terms of problem solving we are back to square one.
And what happens when the bulk of the users pay a higher price for the same stake? The early adopters become the new whales and so we have the same distribution problem.
Gaining influence is not the only incentive to want steem power, financial incentives are also a big part of it. Also upvote value increases when the price increase, for these reason they will buy steem power at any price, if they don't the project would fail anyway as rewards would go down while user base is still growing.
As I said above influence is only one incentive, many people buy steempower to earn profit with curation rewards. A good curator with $ 10000 stake can earn $200 per month doing nothing just by running a bot, this is arguably the main reason people are buying steem power.
We are down 98% from july because the whales decided the price was overvalued, simple as that. There was just too much pressure from them but don't assume there was no buying. If the price went to $4 in the first place it means there was buying.
Sorry I meant to say people with the most money dictate the market . So yeah the whale have the most influence in the market because they can move it both ways.
They can't force volume, but they can maintain price. If people don't see the point of selling below 0.05, then the price just won't get to the 0.01 that might be attractive to many buyers. It will stagnate at 0.05 with few sellers and few buyers. i.e. low volume. That's actually what we've been seeing for a long time, but with a more or less steady declining trend. There is, however, no guarantee the declining trend will continue or that the price would ever get low enough for you or others like you want to make large purchases.
This is why many coins, even almost completely worthless ones, almost never go all the way to zero. They get stuck with existing holders unwilling to sell, buyers unwilling to buy, and volume cratering.
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What happens is that there are more users/investors each buying the same stake for higher prices. Previous holders are willing to take profits on a portion of their stake so they own less stake (%), although the value of that stake may still increase. The distribution flattens out from both sides.
That's why demand-driven high prices are better for distribution than low prices. Low-ish prices generally lead to either volume dropping off to next to nothing, in which case stake distribution is largely locked in place, or most holders dumping while a few true believers or pumpers accumulating all the stake at low prices (in which case distribution gets worse).
Whales would be happy to sell at any price (down to some minimum where some whales will feel they might as well just hold on and hope for the best), and happier to sell at higher prices. The primary reason we are down 98% is that there isn't demand to buy. The site (and blockchain platform) isn't growing, isn't large in terms of existing (or remaining) user base, and doesn't show all that much visible promise in terms of development. Maybe that will turn around at some point, maybe it won't.
The thing is that adoption takes time, most users will probably start using the site when the price is already very high. This creates a problem where there isn't enough whales to upvote all the content which will be spread a lot and in a lot of different languages. Add to that the fact that late adopters will clearly be at a big disadvantage, imagine if the price is 100$/steem when people adopt it, it means those people will have to pay a 1000 times higher for the same stake, so you would have to be very rich to get any kind of influence and so we are back to square one.
I have noticed one thing is that there is even less buy order than before the fork, I think people are waiting for the price to go lower, they don't want to be dumped on by the mega whales.
It's crazy to think that litecoin or other shitcoin have consistently much higher volume than steem, I mean these coins do nothing, steem is really a great innovation, with lots of community support, I don't think developement is the issue because there are some very nice project like busy that are coming.. I think either the FUD campaign made by bitcoiners early on really worked well or the hyperinflation discussion scared people away or it is a perception issue ( if I can post to earn steem why the hell would I buy it kind of thinking) or simply a lack of understanding how it works.
I have invested a bit in steem mainly because of busy, I bought just after their annoucement. I think steemit.com is not really friend/family friendly, not enough privacy and many missing feature. My hope is that busy becomes a central hub with a busy app store ( steem based app) a marketplace and chat. I think people will start to realize the potential of steem when busy launches. We will see, I personnaly am willing to take the bet and buying all the way down :)