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RE: Why The Price Of STEEM Has Been STAGNANT!
Steem is stagnating because people are trying to live off of it and keep selling it. That's fine in my opinion, at least average people (non day-traders/programmers) can live off it. Most other cryptos primarily function as hoarding coins.
Many of the sellers have not abandoned Steem, they just want to buy lunch. I'm quite happy because I bought a lot of Steem and would have not been able to get an account this size without this selling pressure. Steem is by no means dead or dying.
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"Steem is stagnating because people are trying to live off of it and keep selling it."
When somebody sells something, another somebody buys it. There has to be a buyer for there to be a seller.
So "people selling Steem" can't be the cause of the low prices we're seeing. Someone bought that Steem - it doesn't disappear.
The problem is related to supply and demand (which explain just about everything in economics IMO). Demand for STEEM is down, while supply remains strong. That's a classic recipe for sagging prices. Sadly, people just don't want STEEM right now, so it can be had for cheap.
Maybe they're foolish, and they should be buying it up cheap right now? That is yet to be seen. I hope that's the case.
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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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.
Oh I love STEEM personally and am pretty bummed to see it not doing as well as it could. There are a lot of other reasons that I won't get into just yet but mismanagement is one of them. I agree that the bear market was nice for accumulation- I was able to scoop some at 33 cents and below. My best purchase was over 440 STEEM for only $100!
When the alt-coin markets pick back up and they start to adopt some of these new hardforks I think STEEM will finally gain some momentum again. That low liquidity can work to our advantage too so the pump is inevitable. I have been stocking up on some liquid STEEM for that when that day comes and then I will start powering down to cash in on the hype cycle.