Great day to convert Steem Backed Dollars to STEEM!
Recently, Steem Backed Dollars have dropped below 1 dollar! This happens because as the price of Steem falls very fast as it has recently done, it becomes risky to buy SBD to convert into STEEM. In theory, whenever SBD drops below $1 USD, a profit can be made by simply buying SBD, converting it to STEEM, and then selling the STEEM. This sort of mechanic takes time, as it takes multiple days to convert into STEEM from SBD.
Due to this multi-day risk, it is possible that SBD drops below $1 as the price of STEEM falls.
My personal viewpoint is that STEEM will bounce soon. There are a couple reasons for me believing this:
- STEEM has tanked, and is really close to an oversold position. Oversold things bounce.
- STEEM is being promoted by Jerry Banfield again on his media as a good investment
So anyone holding SBD today, if you convert to STEEM, my understanding is it will take 3.5 days, and you will receive an average pricing spread over the next 3.5 days. This average pricing should peg 1 US Dollar worth of STEEM for every SBD converted, using the average price of STEEM over the next 3 days.
This makes your SBD worth $1 US dollar for buying STEEM, but on the markets today, it is trading at or below 90 cents. This is like a 10% bonus for people who buy SBD and convert to STEEM using the internal STEEM platform.
The risk here is you will own STEEM at the end of 3.5 days, whatever price that ultimately comes in at. That all said, I plan on doing this today as I am fine owning some STEEM here since I expect a total market bounce soon. Maybe it has already begun.
To check the current price of SBD on your exchange, use this link here: https://coinmarketcap.com/currencies/steem-dollars/#markets
I just issued the command to convert my SBD to STEEM, so I will let you guys know in a few days how it turns out! I think it is possible STEEM trades a hair lower before we see the big rally, but I do not feel like trying to find the exact bottom before the bounce, where we are at today is close enough in terms of STEEM's pricing for me.
Steem price needs to stabilize a bit but following the Bitcoin this is unfair to the Steemit community. This just shows how badly we need a fiat>steem and reverse only exchange with a debit card. It's time to breakout from Bitcoin's shackles and the whales decisions.
Totally agree. STEEM is a better currency than bitcoin, and even coins like DASH, STEEM makes a better currency I think. But it needs that STEEM/USD direct trade to be seen as great.
Would be awesome if the STEEM community could do a kickstart or something to get this going.
This is great information, I never thought about it this way. I'm kicking myself b/c i converted my SBDs this morning at at 1 to 1 ratio with Steem through block trades. Thanks for posting this!!
This is good to know because I have 10 SBD, thanks for doing the math for us.
Nice post Ted - gave you a little plug too.
https://steemit.com/back2basics/@sirknight/back-to-basics-mens-fashion#comments
Why just not buy on the internal market now?
You could, but if all goes to plan, you'd make more buying SBD and converting to STEEM. You would get that 10% discount to work in your favor. So you could do what you're suggesting and buy $1 of STEEM and get 1.12 STEEM on Bittrex. Or you could buy $1 of SBD and get 1.14 SBD on Bittrex. Then if you sent the SBD to your Steemit account and did the internal system conversion, it is going to convert it to Steem.
If the pricing right now turned out to be the total average for the 3 days, you would end up with a conversion of 1 SBD buying 1.12 STEEM, because the internal conversion treats SBD equal to dollars.
Meaning $1 USD -> 1.14 SBD -> 1.27 STEEM ... This means you could effectively buy STEEM at a price of $0.78 cents per token, where as if you just buy it, you would be paying $0.89 cents. Obviously, the actual values will turn out different as this all works on 3 day averages. This would be something like a 10% discount to the price of STEEM using this method.
"maybe it has already begun"
can you explain , i thought till august 1 it will stay low
If people know it's going to rise August first, it could rise in advance of August 1st. Then also, it's dropped so far so fast, this makes it oversold. When things get oversold they often bounce. I'm not sure where the bottom is before it bounces, but I anticipate the bounce. Also, with STEEM I think there is perhaps less downside potential than with other coins.. Yes it could go down to 70 cents if the market keeps tanking before the bounce. However, on a bounce I expect to see it 1.20+ for STEEM. So what I am sharing here is a opportunistic trade rather than an investment, but even as an investment, STEEM below $1 is good long-term.
meep
i don't get it. Is there a tutorial somewhere, why I am feeling so lost? Dual currency? and what are power up? so complicated
Just imagine there is 1 currency like other cryptos, which is STEEM.
Then there is a 2nd currency, but unlike most other cryptos this one is not a pure floating cryptocurrency, but rather attempts to use a market mechanism inside the steem platform which attempts to make this other currency equal 1 US dollar.
This 2nd currency does this by the conversion option in our wallets, which lets us convert SBD to STEEM, which attempts to make 1 SBD worth 1 USD in that conversion.
If you don't understand that, just remember, STEEM is the cryptocurrency. SBD is a more stable 2nd currency which attempts to mimic the price of the dollar.
Great article! Thanks