Is buying Steem Dollars at 0.00127 BTC a sure bet?
I'm seeing the market price of Steem Dollars fluctuate. They've skyrocketed after Poloniex and now they are approximately at 0.82$ each (0.00127 x 650$)... which means they are undervalued.
The backing mechanisms seem to be factoring a higher price for STEEM but when the 7-day price is adjusted to its current lower levels (closer to 0.004), it is inevitable (?) that the ratio should be closer to 1:1. Right?
So unless Bitcoin does a huge spike (for those using bitcoins instead of fiat), it seems like a nobrainer to buy SDs at 82 cents...
Am I overlooking something?
I was thinking the same thing. I actually bought some earlier at 0.00130 ...
does anyone have a link that explains how the pegging works?
It is the "convert" function which is the failsafe to market failures: https://steemit.com/money/@theoretical/why-would-anyone-use-the-conversion-function-when-they-can-trade-their-steem-dollars-on-the-market
"When this trade is possible, market participants with deep pockets should step in and do it, which will drive the price back up toward $1.00 -- it is highly unlikely Steem Dollars will ever trade much below $1.00 for long."
The peg is very simple: If you have SBD, you can "settle" (or "convert") them into STEEM at a fair price after one week.
The "fair" price is taken from internal and external exchanges and trading and the 1 week (averaged) window is to ensure that you can't easily manipulate the price feed.
So .. after one week, you can exchange every single SBD you hold into the corresponding amount of STEEM .. independent of what the internal or external markets actually look like.
I personally prefer trading in the DEX, but if you need to exchange a large amount of SBD and don't want to move the markets .. then you should use the convert feature.
i also saw this early, bad thing is that i dont have single penny to buy.
you got it.. good :)
It is pretty much a sure thing. There is no actual reason for this price drop (nothing happened to Steemit or STEEM to make the price drop). The reason the price is low right now is because Ethereum is going crazy after the fork and the attack that was promised on Ethereum Classic, and the different exchanges accepting Ethereum Classic, and exchanges saying they might accept Ethereum Classic in the near future. And some people with a lot of STEEM probably decided to sell some STEEM for Ethereum which dropped the price. And Bitcoin went down a little in value on top of that, so STEEM when down in USD value while not actually going down in Bitcoin value too much at first. But once all these factors added up, it made it look like STEEM was going down, and everyone started selling. So if you buy right now you are buying from all the panic sellers.
But there is no reason for the low price. There was not another hack. Ned and Dan are still running Steemit and keeping it online. There is no actual reason for the price drop other than panic.
And now there is an alternative ios blockchain interface so even steemit going down is mitigated: https://steemit.com/steemit/@riensen/steem-ios-app-announcement-first-native-ios-app-released-approved-by-apple-beta-download-available
That noise is the sound of me backing up the truck. Good catch!
The short answer is no, $0.82 is a fair market price. I wrote about it today https://steemit.com/money/@furion/trade-ideas-for-july-26th-2016
Right now it is, every price always is a fair market price :p
I'm sure it'll go back to $1 within a few weeks, maybe even this week already.
Interesting idea! I never did get my BC accounts setup, I should hurry up and do that...
This is an excellent observation alexgr. I will definitely analyze taking a position in sd's (sbd). Thanks to your post it is on many peoples radar now.