Irrationality of Cryptocurrency Market: STEEM now ranks below DOGE at 38. What the heck Bitcoin Diamond and Bitcoin Gold contribute to the Blockchain Technology?
Cryptocurrency market one of the most irrational market, specially with altcoins. Hype, pump and dump, speculation runs supreme. It is also a rabbit hole for new, noob traders who lure to the market to become rich in quick time. BitConnect scam has incurred millions dollars from investor's pocket, still people don't take any lesson from it.
Unfortunately, though STEEM is the most active blockchain in the world by transactions and has strong community, it is lagging in recent short bull run. It now ranks below DOGE coin which is a meme coin that started as a joke and now has little to none developments.
On the other hand, STEEM is rated highly by the neutral agencies such as Chinese ICT ministry and WEISS ratings. It is one of the fastest, feeless, scalable blockchain and has continuous developments.
On the other hand, forks of Bitcoin such as Bitcoin Diamond and Bitcoin Gold who have just changed the PoW algorithms, a mere contribution, now ranks 31 and 32. These coins don't have any future since they don't bring any innovation to the table other than creating Pump and Dump opportunity for shrewd traders.
Recently, @clayboyn has written a blog "STEEM Price Manipulation?" where he opine that high price of STEEM in bithumb is confusing new investors. In fact, Bithumb has disabled deposits and withdrawals for several cryptocurrencies. With zero trading, traders in Bithumb went crazy and trading at unimaginable values of cryptos. If suddenly, Bithumb enables deposits and withdrawals, traders will be bagholding high priced cryptos.
In another recent blog "Steem is priced roughly $100 million less than Bitshares, does that make sense?" by @jrcornel, he wondered why STEEM lags BTS for $100M marketcap. One of the reason is that STEEM lacks positive sentiments due to in-fighting about reward-pool in Steemit. Another thing could be that STEEM lacks serious marketing campaign compared to top crypotcurrencies.
One of the fundamental issue with STEEM is that its inflation rate is higher (8.7% a year) to reward upcoming new users. However, most STEEM are currently earned by the existing big holders. They can sell these newly earned STEEM at any price, since they need not to downsize their initial SP holding. If they have bought STEEM below $1 or, earned them at very early stage when rewards are easier than they have nothing to lose at current low price of STEEM.
However, to consume these high amount of STEEM, an influx of new investors are required. Due to bear market and negative sentiment in Steemit, it is not happening. Moreover, STINC is very stingy about marketing or, holding marketing campaigns for the future.
Therefore, it may take long time for STEEM to correct its value since the earlier investors have to sell out their positions to new investors. Or, big releases in coming months can improve the sentiment about STEEM to attract trader's and investor's interest. Finally, solution could be to reduce the STEEM's inflation to lower rate.
Assuming that STEEM distribution has completed reasonably (better than ICOs such as EOS). New STEEM production will only be used for interest on staking (i.e. PoS mining) and witness compensation.
Demand for STEEM will come from bandwidth purchases from the companies behind the SMTs, scarcity and speculation. STINC, as a owner of Steemit will lunch their own SMT to reward Steemitians as it is done now. Perhaps they can airdrop their SMTs on SP holders.
Whatever, the inflation rate for STEEM, it is an excellent technology and hugely undervalued. Most of the time, market play irrationally. Its investor's responsibility to find the undervalued cryptocurrency and take a stake on it. Hopefully, STINC will release upgrades in coming months and go for Guerrilla marketing to attract investors. At current inflation rate, it needs higher growth of investors, period.
Disclaimer: This opinion is not a financial advice, it my personal perspective and opinion. Please seek professionals for financial decisions.
Image sources: Most images are open sourced (e.g. Pixabay, Wikimedia etc.) with Creative common license. Some images are used with due courtesy to respected owners.
Thanks for reading.
@riseofth
Cryptominer since 2013, occasional trader and tech blogger
I think it is all about adoption in terms of active users. The recent declines in market prices have lowered the incentives for new users to remain active posting and curating content which is the drivers for blockchain activity. If the ecosystem of Dapps cannot retain user engagement the perceived value will decrease which leads to where we are today. It could be marketing or a better way to distribute incentives but user engagement is must as long as the blockchain depends on transactions.
Yes, users retention is a big problem, specially at low price of STEEM. Whether SMTs and Oracles can be used as another layer of incentive has to to seen. However, STEEM should decouple from rewardpool to attract investors or speculators.
I 100% agree that the STEEM blockchain is incredibly undervalued and my general thoughts are that it's capable of doing pretty much anything EOS or other dapp platforms are designed to do. We don't really do ourselves any favors with the extreme centralization of the token. The fact that 1% of accounts have over 500 SP is very daunting. I've written many posts about this in the past and I believe the only real solution is to change curation to create incentive for large stake holders to vote quality content and create a platform that people want to use. That being said, I really do believe that SMTs and Oracles are going to be a way to promote quality content regardless of where the STEEM production goes. Ultimately all of these STEEM tokens are about bandwidth control and when we start seeing large scale adoption and SMTs segregating content into its' own niches, I think it'll take the focus off not being able to earn STEEM tokens and put the production value of SMTs into whatever the actual content that the specific dapp is designed for. How that affects the price of STEEM is hard to say though. Hopefully we get some strong dapps or corporate adoption to push the STEEM price up and the SMTs gain value based on content and user base.
Yes, current policies of distribution is not helping the centralization problem for STEEM. STEEM should decouple from it through SMTs. Rewardpool tweaking can't do that much changes, trials with SMTs and Oracles can show other alternatives distribution.
of course I agree, the current valuation makes little sense... However, I have a feeling this is about to change.
Here is prediction for me, time stamped 7/18/2018 - Nostradamus Moment
Right after SMT launch we are going to see a crazy pump, it might even go passed the 8 dollar valuation. It will correct heavily soon after, leaving the price of steem around 2-3 dollars for a while.
With the creation of SMT tokens, shitcoins included the climb up will start and 12 months after the SMT launch, Steem will be comfortably above 15 USD a coin.
Of course, this is not financial advice by all means. But, SMT is steem becoming the shovel so that the gold rush can begin. Shovels are very valuable when people are crazy about digging for gold.
I like your Nostradamusnic prediction, specially, the humorous presentation of it.
It's more than a little disheartening to see Steem suffer in the lower ranks. we should be rising up past the thirties the twenties and eventually heading into the top 10. Dogecoin? I don't hate it but I would hardly compare it to Steem.
Yes, however, economics (i.e. inflation rate, distribution) and perceptions (i.e. evil whales, bots) have big rules too.
Great article. Its all about marketing the product. Community helps too.
Thanks.