Massive power-downs versus less investment. Perhaps the reason why the price of Steem could further take a hit in the coming weeks and why it's a win-win situation.
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So I'm sure you've realized the price of Steem hasn't been too good and on the decline for about a good month now ever since it hit over 4 dollars. That was an exciting time and it grabbed the attention of many new investors both in time and money. New investors realized, "wow Steem is on the rise and possibly could go in further" and joined the train. They realized they could make money blogging and curating and a lot of people actually did. Most initially cashed out to test it out and that money probably never came back in but during that time the price was still ok and there was further investment.
I checked out steemwhales.com just this morning and realized how much only the top 50 users are powering down within the next 10 days only. I added them together and it came up to about $985,480, with @steemit withdrawing about $745,616, a good chunk. I don't know if that's the official account of Steemit but if that is, it probably makes sense as they'll probably need all that money for further development given the fact that Steemit is beta and in development.
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Either way, this will take a hit on the price of Steem. These are only the top 50 users and we're already at close to a million dollars. If you put together the power downs of every user on Steemit, I'm sure it'll significantly further push the price down. With all the excitement surrounding Steemit, new users are joining day in day out to test it out and see if they could also make some money out of it. That's how Steem is advertised anyway. Some users are reinvesting it back into Steem power and others are instantly cashing out. Check the wallet of new users who earned a lot of money and you'll see what I'm talking about. Steem power is supposed to ensure the stability and long term health of Steem/Steemit. With all these power downs, it's hard to imaging the price going up.
The price going down also means, less confidence by further Steem power holders and discourages users from locking their earnings in Steem power and committing to the network, rather encouraging them to cash out to get the most as they anticipate further decline. This further takes a toll on the price.
There's an upside though. A lower price of Steem means, people can now power up for cheap. The more the price goes down the more people can now buy more tokens they wish they had, to power up, so this will be seen as an opportunity. But then also, because of the history of intermittent stability and continuous price decline, users may hold off on powering up, still buy Steem and cash out when the price of Steem goes up. Which will further draw down the price.
There's more than enough reasons to hold Steem power, if we could further add more reasons to that, that will be great. With all these choices by users going on, whether the price of Steem goes down, stabilizes or goes up, is all a matter of time. We will have to wait and see.
Great post Kay. If every user whether new or old buys Steem for atleast $50 the price of steemit will go up. It is a good time to buy and power up. Always the $$$ figure changes up or down on the value of the market but I have always seen Steem Power go up only unless you power down to withdraw. So this is the right time to buy Steem and Power Up.
Absolutely. I will be buying some more myself :)
Your analysis is flawed by not looking at what the steemit account is actually doing. It is of course owned by Steemit Inc. as you suggest, and if you look at the account itself it is holding a huge amount of Steem in reserve, and only selling via Blocktrades and the internal market.
Thanks for your feedback. None of this is fact. These are just my thoughts why i think it could go down. It's based on what's happening and having a healthy discussion about it is all i wish for, for this post. I'm for Steemit and want Steem to do well. Having said that, I'm curious why @steemit is selling via blocktrades and the internal market? Are you saying it's not a "cash out" but rather money moving through the network? Why the power-down? Is it for development purposes as i mentioned?
PS: I've edited the title a bit. From "Massive power-downs versus less investment. Why the price of Steem could further take a hit in the coming weeks." to "Massive power-downs versus less investment. Perhaps the reason why the price of Steem could further take a hit in the coming weeks.". Perhaps that will make the post seem more of thoughts than factual analysis. Thanks again for your feedback :)
UPDATE: I've changed the title further from "Massive power-downs versus less investment. Perhaps the reason why the price of Steem could further take a hit in the coming weeks." to "Massive power-downs versus less investment. Perhaps the reason why the price of Steem could further take a hit in the coming weeks and why it's a win-win situation"
Sure, I'm just pointing out that Steemit the company does not appear to be contributing to the current sell-off as they are being very careful about how they sell their Steem. Part of their powerdowns is also used to fund the
steemaccount, which is used to pay for new account registrations.Steemit using the internal market is positive because 1) It shows they believe in the Steem Dollar and 2) It provides liquidity in the internal market.
I believe Blocktrades offers large bulk purchases to private investors so that's probably why Steemit is using them instead of trading on the open markets.
Thanks for your understanding :) Makes sense that @steemit is using blocktrades because of bulk purchases :) I have massive faith in Steemit and wish nothing but the best for it :) Thanks for your contribution :)
Who are @goku1 and @amcq are those employees?
They both received 250000.000 STEEM POWER from @steemit . So they could be, or maybe not.
I have no idea who they are.
Thanks for calling attention to the selling pressure from new writers who earned a lot of SD from their first post and (I have to admit, prudently) cashed out.
There's also selling pressure from the miners, many of which want to cash out to finance the power for their rigs.
Right now, that selling is not being met with corresponding buying pressure. STEEM's success as an investment is going to depend a lot of the latter. Right now, there are only two reasons to buy: to power up or to bet on STTEM rising (speculative demand). As long as STEEM's falling, the latter is iffy. Let's hope bargain hunters overpower trend followers!
Haha. I didn't know about the selling pressure from miners, but if that's true, there's another reason drawing the price down although the use of the funds to further their mining rigs is probably a good thing. I'm also assuming there's less buy pressure versus sell. Powering up for cheap is one thing encouraging buys but then again people may hold off to bet on Steem as we both said. Thanks for your feedback. Steemit is a great idea and i hope that is more than enough to withstand all this. Hoping for the best for Steemit too :) Let's all hope :)
I am glad is has and continues to decline in price. Means I can buy it cheap :) Its bound to be worth more as the platform gains more traction.
I agree :) It's a win-win whether it goes up or down :)
Yes, it sure is :D
TLDR: Summary
New investors realized, "wow Steem is on the rise and possibly could go in further" and joined the train. Most initially cashed out to test it out and that money probably never came back in but during that time the price was still ok and there was further investment. Steem power is supposed to ensure the stability and long term health of Steem/Steemit.
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