SBD / STEEM DOLLARS now worth nearly TEN US DOLLARS each, WTF?! 😱

in steemit β€’Β  7 years agoΒ  (edited)

Regardless what you do, and even when it seems you've done all the right moves, the markets have a unique way of making you feel foolish and uninformed. Sort of like playing poker, if you can't find the "sucker" at the table, odds are it just may be you.

And here we go now with SBD teasing $10 US each, when they "should" be worth $1 US. How can that even be possible? As I've often told others, pricing of just about everything is rather arbitrary and based on people's perceptions and beliefs. That's why you should never short an asset (or currency gone "asset") without a strict game-plan in mind. I felt pretty clever trading in my extra SBD for STEEM in the $2s and $3s (around 50 SBD cents). Now, not so much that STEEM is selling for under 13 cents SBD each...

The reality is that while something may seem ridiculous price-wise, over the years, I have also witnessed worthless stocks (as one example) trade from 50 cents to $100/share, and back to 50 cents, destroying countless trading accounts along the way from those who firmly believed "there's just no way it can go higher than that"! And as we have all witnessed countless times now (even if you've only more recently become familiar with markets through crypto), nothing attracts attention better than skyrocketing prices. So technically, SBD's exponential rise also stands to attract a great deal of additional attention to STEEMIT, even if others may think it's a "bad thing" that SBD has currently become "unhinged".

In the short-term, if demand severely outweighs the current availability (the float and instantaneous liquidity) of an asset, all bets are off. And just like with bitcoin, while it could very well drop back 50% in a heart-beat, it can also very well double again, as I've been parroting in the various STEEMIT-related hangouts on discord, especially in light of the ridiculous "Operation DragonSlayer" rumors that so many seemed to "buy into" the past few weeks. More on that later...

And that's the thing with SBD. In the short-term, if some big whales want to come in and buy the crap out of SBD, well, there were only around 3.5 MILLION SBD outstanding. That just may be pocket-change for a well capitalized crypto-mogul to have some fun with. If they sell into the spikes, and buy back all the incoming float as it settles back down at a higher level, they can rinse and repeat almost indefinitely as long as they can keep attracting more attention (aka demand) at higher prices without letting things get too far out of hand too quickly (ie. the ultimate blowoff phase). That's sort of what I see going on with bitcoin (and now think... dun dun dummmmm.... "Operation DragonSlayer")!

Scare as many people as possible out of their bitcoin positions so the "deep pockets" can reload the boat and lock-up the float. Then start stair-stepping back up again until it unfolds into a whole new run from a new higher price floor. To me, this is the ultimate in market "FUD" (spreading "Fear, Uncertainty, and Doubt")! As I wrote last Sunday in another discussion about it in the Whaleshares Discord chat...

alexpmorris: seems like some big group likes to start friday night raids in crypto
kind of like all this dragonslayer stuff everyone keeps fretting over too, what a great way to try and orchestrate the next short raid to 20K btc lol

alexpmorris: but regardless, didn't say any of it makes sense, but if someone wanted to try and create another leg up with a large part of the float locked up, the best way to do it would be to scare everyone out of their positions and then force them to chase all the way back up, again
pumps generally occur on the upside, not downside

alexpmorris: if someone wanted to orchestrate something like that, why even leak it with fancy names such as ... duh duh duh... "dragonslayer"! lol

Possible solution for SBD shortage?

In the stock market, when share prices go nuts, companies will often issue more shares in a "secondary offering" to increase their working capital so they can take advantage of the huge price increase. BioTech stocks are notorious for doing this, especially after releasing "amazing" trial results that cause triple-digit price gains.

As for the STEEM blockchain, this could be a great opportunity to pump up the reward pool. For example, one possible solution would be for the STEEM blockchain to have witnesses track the market price of SBD as well, and if prices get too far out of whack, they can designate the chain to "print" more SBD to match the demand and "sell it" on the internal market to buy STEEM, which would go into a sort of additional "reward pool" account. Once SBD/USD prices normalize and converge back to $1, the account would then start buying back the newly issued SBD liability it created (which would also now provide a bit of a floor for SBD as well). After the "operation" is over, and the account is flat once again, accumulated profits could be added to the reward pool, and/or used as an additional support mechanism for SBD if it falls below a dollar at some point.

😱😱😱 "Operation DragonSlayer"... 😱😱😱

Going back to "Operation DragonSlayer", pumps and market manipulations generally take place to the upside. It's just too costly (interest due on borrowed money, cost of "borrowing" shares), and too risky (short squeezed by the original share owners calling in their loans, raising borrowing costs, etc) to carry massive short positions hoping to "push down" the price of an asset. And as for bitcoin, how would it make sense that a "group of insiders" want to destroy the price of bitcoin to prop up "bitcoin cash" and make that the "main bitcoin fork"?! If anything, it's in everyone's interest holding any BTC to have more value in ALL the chains. I mean, if you can cut your wallet in 3 parts, and have it worth more in split 3 ways than one, why the hell not if there's some "sucker" out there willing to buy it?! The more the merrier!


(😱😱😱 "Operation DragonSlayer" 😱😱😱!!! Maybe not?!)

For those who want to better understand how pump & dumps are orchestrated, you may find some interesting tidbits in Martin Armstrong's article: "Do People Hear Only What They Want to Hear?":

I learned early on that to professionally hedge, one had to navigate the brokers. The only way to deal with them, was to play one-off-against-another, use related markets to confuse and hide your strategy, or else fall prey to the Investment Bankers. In other words, if you had a large position of gold that you wanted to sell, you go to a broker asking for a market in silver. He gives you a quote, and you then buy taking what will become an intentional loss. You go back to the same broker and now ask for a quote on the real market you are trying to sell – gold. He will anticipate you intend to buy because of the silver trade, shifting the quotes to pick up extra profit assuming you are a buyer. When you sell the gold, you just got a higher bid, you are out of the position, and he is scrambling to cover with other brokers. If you hit all the brokers the same way at precisely the same time, they are all now short, and are trapped trying to get out selling back gold that they just bought from you trying to play you for the fool.

I'd also be hard-pressed if I didn't share Martin Armstrong's very astute perspectives on market pegs: "Keeping It Real – WHY THERE CAN BE NO PEG OR STANDARD":

WHY do all PEGS and STANDARDS simply collapse? Aside from trying to eliminate the business cycle, why communism also failed, it encourages speculation. PEGS are the greatest gift to traders in history – the illusive and fabled GUARANTEED TRADE. It is like going to the casino and you bet 100,000 on number 23 at roulette. If you win, you get your 35 to 1 return. If you lose, the house returns your 100,000. It is a no loss game.

I'll also again recommend reading "Reminiscences Of A Stock Operator" (click for a PDF copy I found online that you can check out for FREE), simply a "must-read" for anyone involved in navigating the markets. I must have re-read the book a dozen times over the years. Every time I read it, I find something new that resonates for me as my own experience accumulates over the years.

Oh the Irony...

Remember back in March when the S.E.C. Rejects Winklevoss Brothers’ Bid to Create Bitcoin E.T.F.? They wouldn't want to allow people to trade some crazy highly volatile "fake currency", currently trading at $1300 USD!

The commission said it was rejecting the Winklevoss Bitcoin Trust because the markets where Bitcoin are currently traded are largely unregulated.

The lack of such regulation, the commission said, raised β€œconcerns about the potential for fraudulent or manipulative acts and practices in this market.”

On the flip-side, now in December with BitCoin over $16,000 USD, we have CME and CBOE wanting to start trading BitCoin contracts! Even Nasdaq now wants to get into the "futures" trading game, starting off with... you guessed it, BITCOIN! You just can't make this crap up! lol

Link: Why Nasdaq, CME, CBOE all want in on bitcoin futures

For all those claiming that crypto-currencies are not "real", the truth remains that crypto currency is really not that different than the fiat currency coveted by so many.

As Martin Armstrong so astutely explains in his article, "Money versus Fiat": "A currency is backed by the productive capacity of its people like a share in a corporation."

In another article "Money: What Is It? What is Interest? What is the Wealth of a Nation?", he further explains the true nature of "currency" and "money":

Money is the OPPOSITE of assets and has always been historically. This is incredible important to understand far more than you may realize. If you want money to retain its purchasing power/value, you are creating a false image of how the economy functions.

When the purchasing power of money declines and assets rise, we call this a BULL MARKET. When the purchasing power of money rise and assets fall, we call this a BEAR MARKET. .. I have written many times that there is no magic level in interest rates that will cause the stock market to fall. As a market rises (BULL MARKET), interest rate MUST rise for that is the option on money and its future purchasing power upon return.

In fact, we can even go so far to say that a BEAR market in ASSETS, is a BULL market in MONEY!

In conclusion...

Stay safe in these volatile and exciting times, my friends. Whether you choose to buy up a boatload of STEEM now at 13 cents SBD on the internal market, or convert your extra SBD to dollars at 10:1 while the going's good (if you still have any left), just try not to be too disappointed when you see SBD hit $100 US each!

That's cuz it's a great time to pound up some seriously high-quality 50%/50% posts, and collect as many SBDs as you can while this SBD raid goes on! That way, either way, you'll still come out ahead just for taking the time to write articles and build up your STEEMIT presence just as you were probably already doing!

UPDATE: And finally, it also seems that you can now select 50/50 comment payouts on STEEMIT also, so make sure you all take advantage of that as well!

As always, I appreciate your upvote, your follow and all your comments!

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Β  Β· Β 7 years agoΒ 

well sir you just make a high-quality 50%/50% post and i hope you will get manny SBD. Great idea for raising rewards pool with extra SBD i think we all would benefit from that

With the Steem Dollars increase, I asked my friend @beanz if she knew why and she told me to check out a post of @alexpmorris from a few weeks ago and 20 minutes later, I'm on discord hearing directly from you about this post. hehehe. Seriously, thanks for your insight.

Β  Β· Β 7 years agoΒ (edited)

well, that's kind of cool! I'm glad I was able to come up with something to say that was worth listening to, even if only just a little bit!

look forward to seeing you around the whaletank! :) lol

Great post. Lots of good advice and common sense in here. Some reading material to follow up on too. Thanks and followed!

thanks for the kind words, and yeah, definitely lots of stuff to get you "buggered out" these days!

also followed you back, though I probably would have done it even if only for the funny tickmoji (or is that a fleamoji) profile pic! lol

Imagine we saved sbd instead of steem lol

Β  Β· Β 7 years agoΒ 

Great article. It really is a dilemma. So far I have just traded my SBD for Steem and powered up. I put a little more effort into my post today but alas it is sitting at 37 cents.

and now you have over 50c! :)

Β  Β· Β 7 years agoΒ 

Thanks @alexpmorris!

Β  Β· Β 7 years agoΒ 

12 to 1 now. sold $60 for $600, crazy.

sounds like you still the man, @stackin, though you still missed that shot at 60 for 17:1 or $1000+! lol

Β  Β· Β 7 years agoΒ (edited)

Great article, thanks for the quotes :) crazy times...

Β  Β· Β 7 years agoΒ (edited)

Possible reasons for this anomaly:

  1. Loss of faith in USD Teether - Thanks to Bitfinex
  2. Profit bookiNg in bitcoin, investors buying stable asset class (Sbd) making it unstable in the process
  3. Cannot buy traditional assets gold or USD for taxation concerns

I'd say the tether issue might be a possibility, however that's also been a concern for quite a while now. Also, if that were the case (for any of the points you described), it would also seem there would be a run on bitshares' BitUSD asset as well, but so far that doesn't seem to be the case...



(bitshares BTS/BitUSD chart)

@akexpmorris Terrific Post and inspiring to me to start posting more aggressively right now...............

thanks for the kind words, and happy I was able to be a source of inspiration for you! :)

Β  Β· Β 7 years agoΒ 

It's funny that you quote Armstrong so much in this post about the bull market in BTC because he's been so critical of it. It's obvious from reading his assessments that he only partially understands what it is, which is surprising to me because he's a programmer. For example, he thought that Satoshi would come and claim a "royalty" on Bitcoin now if he was a real person. That's a ludicrous thing to say if you know anything about Satoshi and the history of Bitcoin. He would just spend the likely billions of dollars in BTC he has now and remain anonymous so as not to paint a target on his ass.

That said, most of the rest of what I've read from Armstrong is unbelievably good and his predictions are nearly flawless when it comes to market trends. I have great respect for what he says, because he generally knows his stuff. He's just misinformed about this one subject: cryptocurrency.

There are definitely some areas where he's a bit off, and certain aspects of cryptocurrency certainly apply. However, his historical assessments and "big picture" views tend to be spot on and highly insightful and enlightening. And while I do think he's mostly right on the government-related issues with crypto, such as described in his post "Bitcoin to be Declared a Financial Institution β€” Beware!" (at the end of the day, they still have all the guns and can do WTF they want)...

Link: Bitcoiners Beware – U.S. Customs Agents Are Coercing for Mobile Passwords

... other points he makes seem to be a bit off, such as this one:

So what is the big thing about cryptocurrencies? The idea is that it is money that will not depreciate and is strangely not β€œfiat.” Yet, it is no different than the electronic money created by the bank, which is also outside the strict domain of government. <-- except that "electric money" could easily be confiscated (aka "frozen") by the bank on behalf of the government for any number of potential "issues".

Link: Is Cryptocurrency a Government Plot?

Β  Β· Β 7 years agoΒ 

Great post Alex! Your insight is great. Hopefully STEEMIT will take advantage of some of your ideas!

well thank you there @jricco, and glad you finally got around to posting me a comment on STEEMIT! :D lol

Arrrggghhhhh.... if I had just held my SBD............

yeah, you're hating me right about now ... that SBD worth over $10,000 US now at the peak of the last spike... :( ah well, shoulda woulda coulda... lol

Yup... woulda, coulda, shoulda.....

I love how thorough you are and how you break this down into digestible pieces. I'm really a crypto done me so I take advantage of those of you who know and understand what's going on. Thank you for sharing.

thank you for the kind words @wandrnrose7, glad I could make it a bit easier for you to navigate your way through some of the "complexity" :)

I really do appreciate it. I will keep an eye on your posts. <3

Β  Β· Β 7 years agoΒ 

Man, i have only just started to wrap my head around all these things and that sounds very rational to me ! thanks a ton for the heads up/confirmation. Just earlier today i was thinking about how people were feeling trapped in USDT to an extent as well, and then again there are almost "movements" in the crypto world to use crypto for trading instead of Fiats ... and here we are with SBD providing an alternative. BUT, my concern being that if the dollar value of SBD is not really tethered, then its basically just another cryptocurrency where you know that the bottom of the currency is somewhere just lower than a USD!! thanks a ton for the summary !

thanks for the kind words @vibvir, glad you found it helpful!

Great Post Alex, you made so many valid points as usual
Thanks for sharing
All the best,

thanks for the kind words, Frank!

Β  Β· Β 7 years agoΒ 

Wow, great post. Yeah, definitely don't power up your posts. I came to that conclusion the other day. Glad my suspicions were correct. :)

Nice post thanks.
I guess it's a win for everyone in some form, but SBD hit $18 on bittrex!!! Just crazy!!
Mind you steem is also rising while bitcoin is going nuts and most other crypto's are taking a nose dive. That I don't really get.
It's great for all of us but why?
Could it be transaction related, the crazy full mempool on bitcoin and ethereum getting hammered by cryptokitties? People seeing the potential of the steemit blockchain, doesn't even break a sweat @700k+ transactions.

Β  Β· Β 7 years agoΒ (edited)

What should I do to survive this condition, when the STEEM value drops dramatically, while I barely have SBD anymore since I have confersed to steem a few days ago even though the steam price is still high enough when compared to today's price , is it possible that a particularly newly joined steemian will survive, please suggest from the masters.
Thank a lot image

thank you for posting!!

your STEEM is actually worth a lot more right now too... in USD, just not in SBD! :)

from coinmarketcap.com:

Β  Β· Β 7 years agoΒ (edited)

So is this saying that 1 Steem is worth $1.86 USD currently? I'm just assuming that from the context of his question and your answer; this is all very new to me!

Β  Β· Β 7 years agoΒ 

It says it right there. Coinmarketcap.com. Yes, Steem is worth about $1.90 USD right now.

wow, you're right, totally missed that!

thanks for this information

Β  Β· Β 7 years agoΒ 

thanks for news. i love steemit

Β  Β· Β 7 years agoΒ 

maybe i will hold little sbd

Β  Β· Β 7 years agoΒ 

its going up man! I'm waiting for the harsh correction

I'm no trader but this was informative and simple to understand. Thank you @alexpmorris

Β  Β· Β 7 years agoΒ 

Nice post

The hacks that started this nightmare are from Virginia - 'Crypto Hill-Billies'...Run Forest Run!!!

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thank you for theme , good luck

YES!!! to the moon I say, this is great news. Steem is such a powerful platform, there is no limit to what it can do. Cant wait to see what happens in the near future with all this crypto-buzz going around...

Well thought out, detailed and informative!

wooow
this is amazing

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Β  Β· Β 7 years agoΒ 

Great post as I learnt a lot.funny enough I updated a post few days back when btc was trading at $10k and after some more days it's surpassed #17k !
I believe in steem and know come 2018 those who power up will have some good happy dance steps to display
Thanks for sharinf

Great post!

Seems like they just made SBD available for comment's rewards. This should up​ STEEM DOLLARS' offer.

Β  Β· Β 7 years agoΒ 

You write well. Good article.

SBD is meant to be pegged to USD in a 1 to 1 ratio so as to give holders of SBD some stability and some tether to fiat currencies. In order to try and maintain this peg, the Steem blockchain through its witnesses employs an action common with central banks: varying the interest rate earned by SBD. Open market operation is another action common with central banks that could be useful in maintaining the peg when the interest is zero and negative interest rates are not an option.

The blockchain could react to SBD price increases by arbitrarily creating SBD and autonomously trading it for STEEM from users in the internal market. The STEEM could then be destroyed in order to reduce the supply of STEEM and increase its price. The price increase of SBD would therefore be transfered to STEEM and the 1 to 1 SBD peg to the USD can better maintained.