A few thoughts on STEEM price

in steem •  2 years ago

Unfortunately I am unable to see anything more than a short term bounce in the near term though I would like to, even though the economic model will change soon and inflation will be reduced. We will see a lot of additional selling pressure from power down time reduced from 2 years to 3 months and many of us still not understand that prices do not move magically but someone has to buy STEEM that is currently for sale to change the supply/demand equilibrium.

I have been observing poloniex order book for a few days which looks more or less like this:

BUY ORDERSBTC VALUE (GROUPED)
0.000133.11935785
0.000044.36478460
SELL ORDERSBTC VALUE (GROUPED)
0.000225.00504923
......
0.0042976.42437189
0.0043978.95529724
0.0044979.89259259
0.00451006.10998484

these are buy/sell orders in the order book grouped to 4 decimals and BTC values only are considered. It is visible that it would take ~1000 BTC or ~750 000 USD to move STEEM to 0.0045 in a single transaction but as we know the real number is 5-10x when you include the short term sellers. This realistically means that a group of people needs to put roughly 5 000 000 - 10 000 000 USD on a table to buy large amounts of STEEM to be able to change the trend.

Why would anyone want to risk this amount having in mind a lot of liquidity that will be added soon? I am not encouraging anyone to abandon the ship, I am here for reasons other than the STEEM price. This is just my view that one needs to consider the information that I described here for the next months to come.

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I powered up quite a bit over the past few months, especially as the price got lower and lower. With the upcoming economic changes, I've put it on a temporary hold since the short term effects are unknown. In the long term I think the price will go up, but it is anyone's guess as to what will happen in the short term.

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I have the same long term view. Provided that a brand new steemit-like kid on the block with better user attraction will not appear in the meantime.

That means that it would currently take roughly half of the entire market cap of buying to reverse the current trend... Hope there are some investors lining up!

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Yep, It's all about hype and user retention. An average VC could provide this kind of money if numbers were good.

Or 1,000,000 new users buying 10$ worth. That might work.
Lots of short term speculation...
It will be ok, easier to get more for your dollar right now

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What steemit really needs are new users. We currently have only a floating 5-10k real user base, which is not a lot.

Looking at the entire order book to determine buying and selling pressure is a fallacy that crypto manipulators use to influence amaetur traders. The troll boxes are full of it but it's complete BS.

You're right about supply though, price will get smashed with higher power downs but liquidity will increase at that point. I'd guess we might reach a supply/demand equilibrium maybe half way into it... But I have no idea, would have to see the markets reaction.

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I agree that looking at order book is fallacy. Here is much worse. There are 5,000,000 STEEM ready for sell on Poloniex, only 1,200,000 are listed. It's easy to check Poloniex account. If they don't care about powering up with huge inflation, what will happen after hard fork will be much worse.

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Thanks guys for the feedback. It may be partially a fallacy, but we need to wait for daily trading volume increase to confirm that.

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That's a good point. I'm looking for some of the larger users to be shaken out and take a chunk out, with that much supply hitting the markets we should see a nice spike lower. Bulls will squeeze the bears for the best price, that much is clear.

One good thing is that with the reduction in inflation the bulls won't be fighting an extra 5% steem per week. It will be carnage however, if everyone powers down the markets will need to absorb almost 8% market cap per week. Can't see bulls handling that straight off the bat, but a few weeks in with more liquidity it makes sense.

I'll personally be getting liquid and wait to see where I can accumulate once prices reach an equilibrium. Exciting times!

@recursive has a good take on the fundamentals https://steemit.com/steem/@recursive/feedback-on-dan-s-economic-changes-proposal-all-good-but-the-3-months-power-down-of-pre-beta-stake-is-a-giant-blunder