STEEM Price Long Term Analysis Using More Than Two Years Data – October 2018

Intro

September is behind us, and it is time for some monthly analysis. One of them, which I do, is the long term analysis of the STEEM price. Every Steemian what to know what the price of STEEM in the future will be. We all here “work” and get rewards for our time and effort in STEEM.

From a perspective of crypto prices, September has been pretty dull. But looks can be deceiving. What does this this means when we take a look at the big picture? A month with a stable price can actually change the picture and the long term trends. I was quite surprised from the results when I did this statistical analysis that I double checked the calculations. What I’m talking about will see further in the post.

There are a lot of speculation on crypto prices, and some people made a profitable business from it. This post is not about that. I don’t believe in short term analysis and get rich quick schemes. Even if some people achieve to get rich in a quick way, at the end they will lose it fast as well. Easy comes, easy goes.

Here I’m doing a long term price analysis, so I can manage expectations and not get distracted by these everyday speculations.

This analysis is taking into consideration all the data for STEEM daily price. Then I’m updating it with the last month data, to see how that month impacted the long term trend.

1. Last month STEEM performance – September 2018

First let see how the last month went. Here is the graph of the STEEM price in September 2018.

_{screenshot taken from my excel file}

The value of STEEM in the previous month was in the range of 0,7$ and 1$. For the crypto world this has been pretty stable month in terms of price.

Steem entered the previous month with value of around 0,9$ following the down trend from the previous month. In the first day it showed a sign of a slight recovery and reached a value of 1$ on 3th of September. Then started to fall again and in the middle of the month reached the monthly minimum of around 0,7$. Until the end of the month the price mainly remained stable, slowly increasing. STEEM finished the month with a price around 0,9$. The same price at the start of the month.

2. Collecting long term data and determining the trend

For the purpose of this analysis I use the available data on STEEM price for more than two years. The period analyzed is from 18.04.2016 to 30.09.2018.
The source data for this is coinmarketcap.com

The data is imported to excel, formatted and a chart is formed from it.

_{screenshot taken from my excel file}

The chart above is a function of the price of STEEM in time. When showing the relationship between one item in correlation with one other factor, this is called simple linear regression. If more than one factor is included the process is called multiple linear regression.

One of the values that represent the accuracy of the model is R-Squared (Coefficient of determination).

In the model above the R Squared value is 0,21. Meaning that, the time as variable have 21% impact of the final output, the STEEM price in our case. This is not surprising having in mind that STEEM is around for a short period of time, from statistical point of view. And in this period the price has been massive unstable. This value is to low and we need more variables to improve the model.

This low value of R Squared is actually telling us a lot. It is saying that at this moment the price of STEEM can’t be predicted, just as function of time. From a statistical point of view everything can happen to STEEM price in time.

To accommodate for this, will include one more variable in the model.

Now except the time, what other variable impact the price of STEEM a lot? Bitcoin! When taking into account these two factors, time, and the price of Bitcoin we have something that is called a multilinear regression. I won’t go too much into details and explaining how it work. It is done in Excel, with the help of Data Analysis tool pack, regression. This analysis is a little bit more complicated with more outputs data.

With Bitcoin price in the model the value of R Squared is 0,53. This is a good value and we can use the model for forecasting.

The equation that is formed from the multilinear regression looks like this:

STEEM = 0,00029 *X - 0,00111 *Y + 47,64

where:
X – Bitcoin value
Y – the date for which the price is calculated

I have made Bitcoin price analysis with a five years base, and R Squared value is around 0,5. I will use that predictions for the model above.

3. Forecasting future price of STEEM

Having extracted the formula from the multilinear regression, we can now input a day in the future, the forecasted Bitcoin price, and predict the price of STEEM. For example, 01.01.2019:

STEEM = 0,00029 *7029 - 0,00111 *43466 + 47,64 = 1,54$

The price of STEEM on 01.01.2019 using this method will be 1,54$.

I hope this goes without saying but just to be clear.

I do not provide personal investment advice and I am not a qualified licensed investment advisor.
It is representation of a very simple statistical method to predict the price. This can be totally inaccurate, and the price can be very different from what it’s shows here. Events can occur that can change the price quite a lot.
In fact, if you look at the past period, the trendline is very different from the actual price.

Having said this lets now play with the formula and make some wild predictions for the next ten years.

_{screenshot taken from my excel file}

From the chart above it can be concluded that the price of STEEM should increase in time, but slowly. Not the insane bull run everybody hopes on. Next year the value of STEEM should be more than 1$, or around the 1,5$ level, and in 10 years it should reach 2,28$.

But this is just statistics. It shows averages and trends, not exact numbers. The R value is around 53% so even in this statistics method there is calculated error. The exact price is simply impossible to predict. Milionis of factors can appear, and millions of scenarios are possible.

We can develop at least a pessimistic and optimistic scenario in the range of the R value. Here how that looks.

_{screenshot taken from my excel file}

The pessimistic scenario is holding the price of STEEM below 1$ for years to come, and the optimistic one is increasing its value in the range of 3,5$. Again only statistics.

4. Trend comparison with the previous month

Comparing this month with the previous month, for which I also made this type of analysis. Here is the interesting thing. This month being dull with little price movement has actually lowered the price of STEEM in the long term. Last month the forecast of the price in ten years was around 3$. Now it is around 2$. For the next year the price is just a slightly down, from 1,69$ to 1,54$, but in the long run it accumulates more.

How can this be explained? Because the STEEM price is not enough for valid analysis and BTC price is included in the analysis. This means that we are tying up the STEEM price with BTC price. And the BTC price have slow increasing trend in the forecasted period.

5. Conclusion and some thoughts of the results

As we can see this statistical model shows a slow increase in STEEM value. Not a crazy bull run. But yet again with crypto you can never tell. Statistically STEEM has not been around that long, to have a valid base for a stable price analysis. Five years data usually is a good base. Including the Bitcoin price in the model to accumulate for this, impacts the price of STEEM in terms of slow and gradual increase. But events can occur, especially a regulatory decisions, that have a high impact on crypto prices, and the prices can vary a lot.

My personal view on this statistical method is that it is a little bit conservative. But as I mentioned there is not enough data for the STEEM. We are trying to predict the next 10 years, based on the last 2 years. Usually it is the other way around 😊. Also, since STEEM is not been around for a long, from statistical point of view with R Squared value of 0,21, everything can happen to it. And I think this is the reality.

There is more probability of those price happening in the next year. For the closer periods of time the probability is higher, and more real, than for the years after.

If we take a look at the possible scenarios, and the pessimistic and optimistic view, we can see that there is a big range. And this range can accumulate on top of another causing wild swings for the distant future. So, the latest years of the analysis are totally hypothetical.

Time will be the final judge of this. Will be interesting in one year time to come back to this analysis and see how they performed.

Slow and steady is the best way forward.

At the end once again.
I do not provide personal investment advice and I am not a qualified licensed investment advisor.
This is a representation of a simple statistical model. Statistics is about trend and averages, not an accurate prediction.

All the best
@dalz

Previous posts on this topic:

• Bitcoin Long Term Price Analysis Using Five Years Data – October 2018
• STEEM Long Term Price Analysis Using More Than Two Years Data – monthly update
• Bitcoin long term price analysis September 2018