You have made countless assumptions only considering one outcome or one train of thought. I agree with pretty much everything you are saying but this is only ONE possible perspective. Without getting into a massive analysis let me give you another perspective: By reducing the powerdown time, this will also increase the confidance of people powering up. Personally if the powerdown time was a week or a month I would gladly powerup :-) But in the current situation I would never power up because of the uncertainty with crypto currencies. Some people might like to powerup but unwilling to part with the funds for 2years+. I agree there would be a race to the bottom, but this will be fought between a small group of whales & traders, equilibrium will be reached, confidence will restored and people will powerup! With a 104week down time even with a price drop there is no incentive to powerup, there is no end to the downtrend because there's no incentive to buy with a 104 week power down period.

You have to see the many sides to this coin :-) From a new users perspective having their investment more liquid would bring way more confidence to investors. As confidence grows so will the price, the amount of people increasing their steempower and so forth...

I know there are many possible perspectives to this issue but I believe reducing the powerdown time will increase confidence, increase liquidity and add great value to investors of the platfrom.