Steem showing some maturity in the face of market volatility - still needs to shake off the SBD elastic band effect.

It's been a pretty good month for Steem, especialy when you look at the volitility of some other cryptos, and the 30 chart for Bitcoin. Steem has been slow and steady, bottoming out at aroud the $1.50 mark on 19 March, and 2 April, and has begun to lift quite nicely since then.

chart from coinmarketcap.com

It has had a few ups and downs, but seems to have been quite comfortable above the $1.50 mark the whole time. Is this the start of the next Steem boom-time?

SBD and Steem continue to move together

One thing that has also happened is that SBD and Steem have tended to move in a synchronous pattern, with the pair always trying to find parity. It would seem that the SBD price is still having an influence on the Steem price, and the same may be said the other way around. It would appear to me though, that it is SBD having the greater influence of the two. Take a look at this 5 month cart

Data taken from coinmarketcap.com and combined.

The Elastic band effect

When SBD goes up, Steem becomes relatively cheaper, and so demand for Steem goes up, pulling the price up towards parity with SBD. If SBD drops, Steem becomes relatively more expensive, and demand starts to decline, taking the Steem price lower too. Over the past 12 months it has become plain for anyone to see that the price of SBD and Steem always settle very close to one another, taking the SBD/Steem ratio to parity. This is what I call the elastic band effect.

SBD/STEEM always tends to parity - the elastic band effect

With SBD free to move up and down with the peg unenforceable, it has assumed the role of the primary transnational currency on the platform. Steem seems to only be used for powering up or leasing Steem Power. The uses for Steem and SBD are interchangeable everywhere else, and SBD being the easier to accumulate in liquid form (SBD rewards), continues to hold a value above what it was designed for; to be an on-platform conversion tool between USD and STEEM, and a debt instrument for converting a fixed USD amount of SBD into STEEM.

The only way for Steem to really get up and going, is for the SBD-Steem parity trend to be broken, and for Steem to become independent of the demand influences of high or low SBD prices. A high Steem price will give us all high post rewards. A high SBD price over-inflates that reward in the short term, but creates an anchor for Steem's long term price strength. Not having an enforceable peg will give us great times every once in a while. A fully functional peg will allow Steem to rise in value, and sustain that value for a much longer period. The platform is designed to pull SBD back down to the 1 USD mark, and so STEEM will continue to follow it back down.

Yeah, yeah... you've heard this all before... but the evidence speaks for itself. Will it ever change? I sure hope so, or the cycle will continue, and Steem will be held back as it has been, and remain a severely undervalued currency.

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