I Stopped Converting SBD For Now
I have been quite busy in the past week, and I haven't gotten around to posting the results of my second week of converting SBD.
If you haven't read them, you might want to check out my previous posts for some context:
Testing The Steem Dollar Peg
Sampling SBD Conversion Returns
My Week 1 SBD Conversion Results: 18.615 SBD | 7.446% ROI
The first week went very well. I made $18 SBD off of a modest investment of $250 SBD. A return of 7.446% in a single week is fantastic. My second week results were less impressive.
Despite nearly doubling my stake to $518.615 SBD, I made a bit less than half the return that I saw from my first conversion of $250 SBD. In week two, I only made $14.603, or about 2.81% return on my investment. That's actually a pretty good return for a week, even if a bit of a let down after my first week. If I had the chance to make a certain 2.8% a week, I'd be foolish not to take it every week for as much money as I could spare.
But for now I've stopped converting my SBD. The reason for that is pretty simple:
The market is pricing SBD at close to 95 cents. I even saw it priced at a dollar at one point a couple days ago. While I'm glad to see it, the closer to parity that SBD becomes the less attractive the conversion option becomes. Conversion becomes a viable option when market participants make themselves vulnerable to exploitation by undervaluing SBD.
I knew right away that my second week wasn't going to be as profitable, because I noticed that the next day the market had SBD at about $0.90 USD. The fact that STEEM was trending downward during the week had something to do with it, but the most important factor will always be the market price of SBD.
As long as the market is pricing SBD reasonably, I will not continue converting. But as soon as the market changes significantly, I will start converting again and I'll continue posting the results.
Thanks for doing this @bacchist. This is some pretty valuable information.
Agreed--thanks @bacchist!
@bacchist So it sounds like the peg is working exactly as designed. I stopped selling SBD on polo after the price dropped from $1.30 to $1.05. I just held my SBD at that point.
Then when the price dropped to ~$0.80 it looks like you and I both reversed direction and started buying with the purpose of converting to steem.
Now you're out of the pool, I just bought back in at $0.90, which means 10% so thanks for that! ;)
Was wondering who I was competing with :D
Oh BTW guys, there is a pricing discrepency between steem/lisk on shapeshift and lisk/btc/sbd on polo. I made a profit of 75% with that route in the last 24hrs.
Now we have steem traded directly on all pairs at shapeshift, you should consider adding that pathway to you arbitrage routes.
great -- i am just starting to wonder about trading SBD's... and the dollar parity didn't really make sense to me --- does that mean that SBD's will never, or rarely, be price much more or less than a dollar?
The economic system is designed in such a way that the value of SBD should be close to a dollar. There are two main mechanics that are designed to help "peg" the SBD to the dollar. Those are the "convert" function available through the wallet, and the interest rate that SBD balances earn. Both have their flaws, but seem to be working enough that right now 1 SBD is worth about $0.95... Though I think mostly that's through the power of suggestion, I'm content to leave well enough alone.
thanks bacchist
You know what I'm hoping the trend becomes. ;)
Hopefully we see a more profitable trend, if not, it's still positive for a rise on anything steemit-related!
Thanks for the info it's good to see this data over a time period.