Chart Of The Day: Buy Steem On The Rumor, Sell It On The News?

in steem •  4 months ago  (edited)

Summary

  • The Litecoin halving caused a big price jump before and at the time of the event, but heavy declines after it.
  • I’m wondering if the near Steem event (HF21) will cause the opposite…?

cod litecoin halving 20190809_140752b.jpg
(Click to view in higher resolution.)

A week ago and more you could read opinions that the Litecoin Halving will curb the price up. This is the 50 percent reduction of the emission of new Litecoins per block. (The coin supply growth per block will be half than before.) In the past, similar halving events, by Bitcoin and by Litecoin, seem to have triggered often a greater price surge.

Halving after halving

And it is difficult to forget that in the summer of 2016, less than one year before the “big cryptocurrency hype”, also a Bitcoin halving happened. (The next Bitcoin halving is estimated for mid-2020.)

cod litecoin halving.jpg
(Click to view in higher resolution. Chart courtesy of
Tradingview)

But back to Litecoin, and short term movements. Litecoin is falling, what happened? After the halving on the 5th of August, approximately 9.30 UTC, the price jumped huge, over 106 USD, in some hours. But just in a couple of hours more, it lost a large part of it. Today, it is much lower than before the halving, by 86 USD.

Million times before

“Buy On The Rumor, Sell On The News” – I think that is what happened. This can be one of the oldest stock market quotes, or, observations. But seemingly it is not well known by all investors. That means:

The saying "buy the rumor, sell the news" comes from the phenomenon of stocks trading up into "big" announcements, and then (often) selling off shortly thereafter. (Source)

What happened with Litecoin happened millions of times before. People knew very early this event will come, years in advance. Those who believe in Litecoin and think in the long term had all the time needed to buy it. Maybe other people seeking only short time returns also bought a lot before the event. After the halving, there were no more buyers left. Instead of the longer-term price jump, a sell-off began soon.

cod litecoin halving BTC LTC.jpg
Bitcoin vs. Litecoin (Click to view in higher resolution. Chart courtesy of
Tradingview)

Buy on bad news?

I think we can observe often the opposite phenomenon, too. Bad news can also initiate a price surge of an asset. At least if this news was already broadly known, awaited, estimated. Many times all investors sold before who were scary, so there were no more sellers left at the time of the event. So, the price jumps on bad news. (Besides, uncertainties are bad for prices. If a bad event happens, future risks can be considered lower after it. Better a bad, but certain news than a bad, but insecure one.)

I have an idea. What if the same will happen with Steem? Maybe we see the risks and uncertainties of the Hard Fork 21 priced in on the market now, by 0.2 USD/STEEM? Many are selling because they don’t want to risk the fork? I see so many discussions and concerns, negative feelings about it.

No more STEEM halving

What if the fork will be no worse or maybe some better than the previous expectations? The event is here and nothing special happens? The fork results to be a big success? What will the price do? Does a rally begin?

I have this feeling but I’m not sure. Because the 13 weeks (3 months) long cool-down of the power down processes can end after August in case of many leaving users. Others are, perhaps, waiting for the fork and can leave after it if they don’t like it. In reality, nobody knows what happens. I only wish not to experience more STEEM halving…

The series “Chart Of The Day”

I started a series with the title “Chart Of The Day” because I see every day interesting events or phenomena on the markets or in the news. Other parts here:

The last ones:

Older ones:

(Photo: Own work)

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I don't think there are enough people out there paying attention to Steem for the hardfork to make much difference, at least no more the a couple cents, either way.

I feel by my own experience on Palnet & Co. that curating is much better by 50/50 percent reward distribution. Maybe Steem world will be a better place and at least the actual users stay and bring some more people. (And so, more attention can be generated outside.) But this is only my newest theory.

Steem the crypto needs 10s of millions invested to just get back to so-so. Will this new world based on curation do that? Maybe....but color me skeptical.

It already has. STEEM has dropped to 1/3 of its value since Steemit Inc announced the EIP was going to be part of HF21. Pretty sure that isn't a coincidence.

Every since I started following you I have never been short of what to ready especially about our steem block chain, thanks for sharing will power up more steem as we awaits the next bulk run ☺

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Please, don't blame me if prices fall. Maybe the bottom is some lower.

@deathcross this fork will change the rule of steem let see hope for the best. I am looking for price up this time.

I buy when people are afraid, I sell when people are greedy. Sell only the profit not my capital... Steem is the future of website and internet...

Can you please explain in short about what does Steem Hard Fork 21 do?