Why Steem crashed, what YOU should do, and where we are today.
Why Steem crashed.
You may be wondering, why this terrible crash in Steem's price has happened over the past few days.
Currently, the price is sitting at around 0.0035~ BTC. And many investors are panicking, including me for a day or two. But then I realised something.
This isn't something that comes unplanned.
In fact, Steem is very public about its dilution rate of around 1% per day currently. This corresponds with the approximate decline in Steem's price over the past week or two.
Do I need to be alarmed? What should I do?
My advice to you is to keep a cool head, and remember that it is the long term that matters. Short term prices can be volatile at times, and even manipulated by margin traders to hide what is really going on. All you need to know is that Steemit is still alive and thriving. Price doesn't equal real value. Price doesn't equal potential value in the future. Price is only a figure that someone is interested in buying something for.
Just because something is crashing, doesn't mean you can't profit from it. You need to go against what others are doing right now. Others are panic selling, but you know for a fact that Steem has a bright future in front of it. You know that Steem will rise in value in the future. Not rise in price necessarily, but value. And that value will be reflected in the price.
Remember that Steemit is still in its beta stages. It is doing exceptionally well, already. It has a larger market cap than litecoin and dogecoin. It has a community of 10k+ active members.
You don't need to be alarmed about the inflation/dilution rate. If the number of quality content that the community produces goes up, then the value of Steem will go up. It's a fact. Right now, it might not be the case. But remember, there are 7 billion of us on Earth. And only a few thousand users are currently using Steemit. Look at the potential Steemit has got.
I suggest that you buy as much STEEM as you possibly can at this cheap af price, and hold it for the long term. Convert it into Steempower, to hedge against a part of the dilution. Remember that Steempower provides you with a 90% P.A. interest, which is better than any bank you can find.
If you invest in Steempower now, you'll cashout the full amount in exactly 2 years. Imagine if just 5 million new people joined, which is a conservative estimate. Their contributions via their unique stories will bring up the overall value of Steemit, as well as the Steem that you bought 2 years earlier.
Where we are today.
Steem, as I mentioned, is still in beta stages and is doing exceptionally well already. We need to consider the bigger scheme of things.
This is what I think we are in the history of Steem right now.
Bitcoin analogy
Gold analogy
Silver analogy
After looking at these charts, and you still think that Steem is about to crash to zero, then I'm sorry. You're a dumb shit.
Good post! I been also thinking a lot about this subject the last few days, and indeed the fundamentals are still good and when this remains, one day the price have to follow the fundamentals and will go up. If you want to buy more Steem, i shouldn't do it now, but better wait till there are some upside technical indications. An important support is just broken, so the price may go some lower first. If you own Steem, don't sell it now, because then you take your loss. Just try to increase the AMOUNT of Steem you have by curating or getting interest till the price rises again.
Indeed. I forgot to mention in OP that the more Steempower you have got, the more you earn my curating as well.
Curation rewards are probably an extra part of interest as well.
Yeah, but, my Steempower has increased over the past few weeks but my wallet's "estimated value" has decreased. It sure doesn't feel like I'm gaining interest. I'm gonna have to hope that the price of Steem rises over the next year/month to make my 2-year-long Steempower withdraw even worth it.
So if I have $2K worth of steempower and I cashout now, do I get the whole $2K by the end of 2 years? What if the price of steem rises or decreases while I'm powering down over the 2 years, will that affect how much I get back? Does the interest still accure on my steempower as I power down?
Go for the long term. Your interest will not accumulate after you power down.
Unfortunately that is the case, however, I think holding Steem for the long term that you get from powering down is still a good idea.
The point of receiving an interest on your SP is to counter the inflation in STEEM.
because every few seconds new STEEMs are created that means that there is an inflation. That's also means that in the long run STEEM price will go down. The power your are given can help you earn more SBD that is pegged to the $.
If you power down you receive every week in the next 104 weeks (2 years) STEEM. how much ? SP/104 is the formula.
Wtf is wrong with your mouse??? Lol
Spot on! I mean, there's always a risk that Steem is a failure, the model is unsustainable etc. But if all goes well, and users start registering, the value will skyrocket.
It's already picking up today.
1- while powering down you receive 104 payments. meaning a payment each week and not a full payment 2 years from now.
2- I think that the price of STEEM is like any crpto- currency bound to supply and demand. If we look at the demand part then the more people flock in and use Steemit the demand will rise. It's a safe bet that we can see high demands.
As for the supply part it's kinda tricky because the STEEM that a created are in the form of SP of about 800 per minute meaning and also users can power down or power up to or from STEEM. meaning that the supply side is very hard to predict. The incentives of the are working behind the scenes are that 90% of the supply will be held in SP.
here is a quote from the whitepaper:
"The price of a digital commodity, like STEEM, is driven by both supply and demand. If new STEEM is allocated to those who are holding long-term then the increase in supply is offset
by the corresponding demand to hold. The impact of this change in supply is postponed
until a future date when the long-term holder decides to sell. The sell pressure is then
distributed over 2 years.
When a long-term holder decides to exit, the supply of STEEM on the market will increase
and push the price down. This downward pressure is countered when a new long-term
holder decides to buy up the STEEM and convert it back into SP. We can therefore conclude
that the price will mostly be impacted by a change in demand for holding STEEM long-term."
For now we don't know if the incentives holds true, back at May 98% of STEEM were in SP. But many things can change. There can also be a whale who start to power down causing a flood of STEEM to the market. this whale needs to be countered by other long term holders.
The comment is long, but I tried to show people how they should approach analyzing the STEEM price, it's not that easy to predict.
Steem is great but we really need stronger interface. There are some great sites like @jesta and his steemstats.com. I like that you urge people to plug in for the long run. With a two year vest you sort of have to look longer range. https://steemit.com/steemit/@iamwne/steemit-posting-report
¨Remember that Steempower provides you with a 90% P.A¨
thats not 100% true. yes you get 90% steem on your steam power. but also the steem supply is increasing 100% P.A. If the demand of steempower is not increasing you can expect the steem price to halve each year. thankfully we can expect that the demand of steem will increase if new users come in that create good content :)
Nice article! I made a post about it yesterday, too.
It's called the cycle of hype:
https://steemit.com/steemit/@febird/mesdames-et-messieurs-i-proudly-present-the-cycle-of-hype-to-you
Slow and steady certainly wins the race!! Thanks for the post!!
Yes I just see the price is picking up again. Lets keep it going!