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RE: Why The Price Of STEEM Has Been STAGNANT!
Supply and demand determine the price in a free market. The inflation or printing of steem is also a major factor here.
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Supply and demand determine the price in a free market. The inflation or printing of steem is also a major factor here.
Posted using Partiko Android
So are you saying there's no free market price discovery of STEEM? I'd have to disagree. There are manipulating factors in the market, as there are in every market to varying degrees, but there's plenty of freedom in the crypto markets (people can buy and sell when they want), and we're seeing true price discovery. The price isn't directly manipulated, isn't set by a central bank, or anything like that. The price is free to move.
Increase in the total number of STEEM (currency inflation) will indeed have an impact, as that is the "supply" side of the equation.
But people buying and selling (transferring) STEEM from one account to another doesn't necessarily drop the price.
For example, we often hear gold permabulls (and I am essentially one myself) getting excited when news surfaces that some country or another has purchased a large amount of gold bullion. These announcements, while exciting, don't usually precede big price jumps. In other words, countries buying gold doesn't really affect the price. Reason? When one country is buying gold, another country is selling it. The news could have been "X country is selling their gold reserves!" and our reaction might be "oh no, the price will fall!" But that's not what happens, for the most part. When somebody sells, somebody buys, and vice versa.
What matters is supply and demand.
I literally said "supply and demand determine the price in a free market" . Steem is a free market and its price is determined mostly by supply and demand with some monopolies (whales) at play.
There's something called selling pressure, when there are more sellers than buyers the price drops or is held down, this is literally what's happening with Steem. Happens with stocks, happens with cryptos, happens at farmers markets. More sellers than buyers = price decrease as equilibrium is reached further down the supply curve.
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Oh, we agree? Sorry, I thought you were disagreeing.
Selling pressure... and all kinds of other market philosophy. Fear of missing out, for example. Rumours, psychological price points, all those things have an impact. (But supply and demand will always have the biggest impact of all.)
And yes, I think there may be some selling pressure because people hear "whales are selling STEEM!"
So this may be an overcorrection to the downside. In other words, it might be a great buying opportunity. If Steem/Steemit survive as a payment system, blog site, and blockchain community, then at some point there'll be a recovery. The alternative is essentially a slide toward $0 as everybody (even the die-hards) stop using the site and stop holding the currency. That's hard to imagine happening, but then again, if you don't know who the fish (sucker) at the poker table is, you're the fish. Maybe I'm a sucker who will hold his Steem until the value is completely gone. I've already gone from $5k to $600, and that includes 2 years unpaid full-time labour, so if anyone's the fish it's me.