Steem inflation rate is 8.5% then why people are asking for leasing at 18.2%.

Steem inflation rate is 8.5% then why people are asking for leasing at 18.2%. The reason is that leasors assume that they will make more than 18.2% within a given period from curation, self-vote, or voting the circle (e.g. who will vote them back). Even some may rent for getting their reputation up to higher level.

On the other hand, leasing 18.2% to others and 1.9% from APR for powering up, investors can earn upto 20%. Now how can that be possible with 8.5% inflation rate with Steem.

Answer is 35% (105M liqui steem) of the Steem is not participating in the reward pool. And, another 55M SP is not active in voting. It means 140M SP holders are taking 8.5% (26M) of total Steem supply (310M). Therefore, rewards is around 18-19% (26*100%/140) for active SP holders. It is possible that Investors can earn up to 20% APR.

Is it affecting any Steem rally? For example, investors are selling their earned Steem from @smartsteem, @ocdb, @delease, @delegationhub or any bidbot. Are investors selling their liquid steem if there is any rally?

However, it matters at what price they have bought Steem. If investors bought Steem below the current price, then they may sell for a healthy passive income. But if assume that most investors bought Steem on average more than $1. Therefore, even if they earn 20% a year, they will make ROI after 4 years. Four years too long time for a crypto investor. Now think about Investors who bought Steem at $2, $4, $6 and even $8. Even any percentage of APR will not make them any ROI in long, long time. Therefore, it is not a sweet dream of passive income for all investors.

Moreover, Steem is a very high risk of investing. Therefore, 20% premium APR (in a year) is not a big deal where it can fall 40% in a week. Also, looking into EOS's 200%, Cardano's 250% and BCH's 300% gain from all time low, steem 20% APR is not a big deal.

Consider the recent price decline of Pimco High Income closed end fund (PHK) to 20% from $9.1 on dividend cut of $0.19 from $0.81. PHK's fiat value is pretty much stable, therefore, 20% fall is not big deal.

The big question is that is 20% APR affecting Steem rally?

Probably not.

Then what is affecting steem's rally. Probably sell pressure is higher than demand. STINC algorithmically sells a large amount Steem. Few content creators sells for partial or full time living expense. Few early adopters are also selling. Few investors are fed up with low price of steem and sold out buy other coins. I know an investor who had average buying price of 60 cents sold Steem at 48 cents to buy EOS at $3.6. EOS went to $5.3.

However, overall it is good news for long term investors. Price will only rise when sell pressure declines over time. STINC is looking for alternative ad revenue. Early adopters can't sell for eons. Speculators are leaving Steem. Finally, with upcoming MIRA and SMT updates, DApps will proliferate, millions of new users will onboard Steem.

They will need Steem Power to have a say on the blockchain. At some point, Steem's demand will outpace Steem's supply. Steem price can rally both organically and abruptly.

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