The price of Bitcoin has been dropping tremendously during the last few weeks. Unsurprisingly, the altcoins followed. The STEEM token is no exception. The price fell from an all-time of $8 in January 2018 to only $0.23 on December 7, which represents a 97% decrease.

In such a case, we can ask ourselves what is the next step, and where Steemit and the Steem blockchain are going.

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Why the price of STEEM is falling

The main reason why the price of STEEM is falling is the drop of Bitcoin. Bitcoin (XBT) is probably the most used payment method on crypto-exchanges. Thus, when Bitcoin falls, the altcoins follow. When the price of STEEM drops, the activity on Steemit slows down, and the rewards are lower than usual. The fact is that the value of STEEM is still too dependent on the price of Bitcoin.

Previously, the price of STEEM and the price of SBD were surging because of two reasons : the market was bullish and people were very optimistic about Steemit. Since then, things have changed. We entered a crypto-recession, and the prices collapsed. Moreover, many people lost faith in Steemit in the meanwhile. Why? Simply because the promises were too appealing. People believed they could earn dozens (or even hundreds) of dollars easily each month by making mean posts. But the reality is quite different. In reality, many posts seem successful, but they're not. On Steemit, if you're friend with some whales, your rewards on a post will increase significantly. Besides, you can pay to buy votes. If you remove the upvotes made by the whales and the bid bots, the value of many "successful" posts in the trending section collapses. People realized that the system is unfair and rigged. Many people viewed Steem and Steemit.com as a libertarian free market, but in fact, it looks like crowny capitalism.

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Why the rebound seems very unlikely in the short term

Many people pretend that the price of Steem will rebound in a few weeks and surge above its previous all-time high. I'm not so optimistic. Why? Here are the reasons...

• Bitcoin is still in a bear market, and we don't know where it's going. The recession could last many weeks, or even many months. As I explained previously, the price of STEEM is very dependent on Bitcoin. In order to rise again in the short term, the price of Steem needs Bitcoin to recover...
• Many users abandoned the Steem platform because they were strongly disappointed by Steemit.com. They switched to other platforms or gave up blogging. They don't believe in Steem anymore.
• The number of real users on Steemit.com seems quite low, despite the enthusiastic statistics. Why? Because many accounts are either bots, fake or inactive accounts. Remove the bots, the inactive people and the small accounts begging for a penny, you'll see number of real users is ludicrous.
• Steemit Inc was expecting Steemit.com to bring many new users. As I said, the number of real users is too low. Further to this, many disappointed users fled the platform. As you can expect, these disappointed people won't promote the Steem system. Currently, it's difficult for Steemit to attract new authors. Steemit is not growing as expected, and it's probably in decline. So is the value of the STEEM token.
• Many users of Steemit.com don't trust Steemit Inc anymore. Take step back and look at the bigger picture. Steemit.com has almost not evolved since last year. Oh, yes, it changed its logo. The site still has an outdated interface, it's still to long to register and it's not user-friendly enough for people who don't know how to write in markdown and people who don't care about cryptos. But the biggest issue is probably money. Steemit Inc recently announced it's laying off 70% of its employees. The main reason is that the recession is worse than expected by the team. That's a bad news. That tells you that Steemit Inc is not profitable enough (if it ever was). But shows another thing: the fact is that Steemit Inc has no real business model. They were counting on two things: more users on Steemit.com (and Steem in general) and a continuing growing cryptomarket. They had no real plan to bring "real" money. When we are in a bear market, they don't bring in "real" money. In fact, the money is fleeing from the platform, people are powering down and shorting their STEEMs.

What about the Smart Media Tokens (SMT)? You can repeat that Steem is not Steemit if you want, the market doesn't care. The disappointed users don't care. The general public (who doesn't understand cryptos) doesn't care. The crypto hype is over for now. The bubble burst. Many altcoins were crushed by the bear market. The "small hands" and overoptimistic people are gone. The SMTs missed the 2017 bull run. Now, there are less users on Steem, which means less people interested in buying SMTs. When the SMTs will be launched, you'll see many useless things, are a very few interesting ones. Let's assume that the SMTs won't be a success. In such a case, it will not rise the price of STEEM or bring a massive numbers of new users. A failure with SMTs would be a catastrophic scenario for Steemit Inc, because Ned relies on these tokens to bring value to the Steem ecosystem.

In my opinion, it's a very risky strategy based on speculation. Steemit Inc needs a real business model. The company needs to bring "real" money from users and investors to back the value of STEEM. Steemit.com and the Steem blockchain need more real users and more investors to thrive. Either way, the price of STEEM and the attractiveness of the platform will continue to stagnate or decline.

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The short term consequences of a very low price

What will happen if the price of STEEM doesn't recover enough? Well, Steemit will probably lose more and more users, because the platform is becoming less and less profitable. People who quit won't bring new users here.

If Steemit is losing users and laying off team members, it's a bad signal for investors. I shows that Steemit Inc doesn't earn enough money and doesn't attract enough users. Investors want a good return on investiment (ROI), and for now, it's hard to think the price of STEEM will skyrocket in the next months...

However, we can see good aspects. The price drop has pushed many spammers away. The people who are still there are people who want to write articles (with or without the money) and people who still believe that Steem can recover. Furthermore, it showed how fragile is the strategy of Steemit Inc. Perhaps it will show Ned and his team some weakness of Steem and Steemit.com. Perhaps they will question theirselves and work on a new business plan. It's a necessary step if they want STEEM to recover, and Steemit.com to bring new users and investors.