RE: Reminder: If SBD Are Below $1, Convert to STEEM
Thanks for repeating this advice. I had not seen it before. I am a relatively new user so am still learning how Steemit and the 3 currencies work.
You imply there is some sort of arbitrage opportunity, so I would like to see if I understand correctly. Is it as follows:?
1 buy sdb on an exchange at $0.91
2 move them to the steem platform
3 convert them to steem based on 1 sbd = $1
4 move the steem to an exchange and sell them at hopefully the same price as in step 3 above.
5 repeat all of the above
The big risk is the price in the 3.5 days you are waiting to convert sbd to steem?
How long has the sbd price been low? What could be the reason? The price of steem fell from $1.22 to $1.19 today. Could this be linked to the arbitrage that
I just described?
Yep, sounds like you have the process down.
Not long. Check the markets on coinmarketcap.
Why does anything happen in the markets? It's chaotic and usually has no single reason. Basically more people are selling than people are buying. As to why that is... anyone's guess.
The price of STEEM changes all the time. It's linked to many things, but I don't anyone's been able to come up with a magic formula for it.
Well, I am very surprised that such a large difference could exist. An arbitrage operation would have an expected mean profit of 9% minus frictional costs. You would never see that kind of difference in the mainstream stock markets. I am quite tempted to try it - but I think I won’t. It would mean sending more BTC to an exchange, and now is not the time to reduce BTC holdings.
I think that explains the fall in the price of steem. Arbitragers don’t need to wait 3.5 days. They simply sell the existing steem now, knowing it will be replenished in 3.5 days. They only risk a loss if steem is trading higher than $1.00.
Prices change pretty quickly around here. 3.5 days is an eternity in the cryptocurrency markets. 9%... well, that's nothing. Things will move that quickly in hours, sometimes even minutes.
Steem has been going up and down all over the place since the beginning, as has SBD. Check the charts, and you'll see what I mean. Sometimes there are no clean patterns to explain things.