Ever wonder why Steem's fiat value keeps plunging compare to its peers. The reason is that Steem has relatively higher selling pressure than its peers. Therefore, it cannot keep up with the low demand, specially in the bear market.
There is 8.5% inflation rate for Steem's emission and 800K Steem are sold by STINC each month. Though Steem is purchased by new and old investors, however, rate of purchase cannot keep up with the selling pressure. Hence Steem is bleeding compared to its peers. Some of the coins such as ICOs have literally zero inflation rate. For these ICOs, someone who has bought the coin has to sell for someone to buy. Therefore, their coin's price bleed's slowly.
In case of Steem, ICO is going for three years if one consider STINC's ninja-mined Steem are sold to open market as a long ICO sell. At this selling rate (800K per month), STINC will be out of pocket in seven years. This is one of the reason, SPS is added to HF21 since STINC cannot spend development funds forever. However, ICO sold on bull market or with hyper marketing has better audience. ICO like sell by STINC has bad effect in Steem's price in bear market.
As a result, Steem's ranking is going down forever. It is shame that a coin with one of the most developments now sits at 78 while scam like Monacoin or meme Coin- DOGE have better ranking than Steem.
One of the ways to keep up Steem's price is to buy up these cheap Steem from the market. If we assume there are 1.2M Steem including 800K Steem are for sell every month, then 40K steem are for sell each day. If 5000 active Steemians on average buy up 8 Steem a day or 240 Steem per month, then Steem's price may not fall further. At 25 cents a Steem, it is $60 only. For a Steemian in a developed country, it is quite easy. However, for a developing country it could a big sum of money.
However, it is the average estimate that 5K active Steemian have to buy 240 Steem per month at least in the bear market. In the bull market, the new investors will enter in drove, then we can sell these Steem to provide more liquidity.
There are some recent achievements on Steem purchase that are encouraging. Long time blogger and investor @ezzy has reached 100K Steem. Popular vlogger and investor @exyle is planning to make his holding to up to 250K SP. I, myself, has plan to buy another 30K Steem to make 100K Steem this year.
Currently, I had a big loss in Fitbit that has wiped out all my trading profit and incurred $3.8K loss. Fitbit and STINC has similar problem with leadership. Though FITBIT has very good MVP, its leadership lacks skills and charisma to please the investors. Similarly, STINC's early leadership squandered the opportunity of the popularity by not making any marketing effort or selling large number of Steem in bull market to hedge. I am still not convinced with STINC's current leadership's lack of interest in any aggressive marketing effort.
For example, if they spend few thousand bucks in marketing. Then they can easily recoup the cost by selling Steem at higher price. In fact, they are in perennial ICO sale, why not do the minimum marketing.
We are in internal marketing bubble for Steem (including this blog post), preaching too much goodies about Steem to our own converted disciples. The target should the potential convertees.
Therefore, I am encouraging fellow die-hard Steemians to buy as much as possible Steem in this great bear market to stop the bleeding. We can use these Steem to buy our favorite TOKENs and keep earning at better rate. I strongly believe that purchasing Steem at this fire sell will be considered as a great investing decisions in coming years.
See also these encouraging post:
https://www.steemleo.com/steem/@ezzy/finally-hit-the-big-100k
https://www.steemleo.com/exyle/@exyle/spud-day-4-spud4-powered-up-1193-steem
You can earn up to $50 in EOS then buy 200 Steem with this Coinbase referral link: https://coinbase.com/earn/eos/invite/273pvq85
Disclaimer: This opinion is not a financial advice, it my personal perspective and opinion. Please seek professionals for financial decisions.
Thanks for reading.
@dtrade
Cryptominer since 2013, occasional trader and tech blogger
5000 Steemians isn't that much, this analysis kind of makes me sad but at the same time I understand that this steem being dumped are by people who no longer see real value in holding and being a part of growth in the platform and those picking it up are hopefully ones who want to look at growing together.
I think if we could eventually get to a point of 70 000 minnows (500SP) who are active, which I don't think is that farfetched, we would have such a strong chain and a stable price and economy
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Great points. Yes, when a large number of users will hold a small amount of SP, Steem can easily reach high valuation. However, there will be always selling pressure since Steem is also meant to provide livings to large number of creators. And, DApps can fulfill this need too.
We also need a large number active and passive investors who sees Steem as a store of value similar to top cryptos such as BTC or LTC. They may not have enough time to curate but can delegate to projects or individual to earn TOKENs or Steem to increase the value of their investment.
Demand for Steem can come from minimum holding (500SP) for RC requirements to be active in many DApps, curation rewards, influence (self-vote in few blogs daily), earn TOKENs by delegation and most importantly, a strong store of value.
Currently, Steem is worse off as a store of value due to higher selling pressure which scares off many crypto-investors. And, investor class is the biggest driver of an asset's valuation.
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Thanks for the valuable analysis, it does look like the Steem design is full of cracks, for want of a better analogy. As a new minnow in a third world country, I only have my blogging power and no cash to invest in steem so its a way to earn via posting original good content. Unfortunately the steem concept is leaking through the cracks in the design by the original @dan inventor. It's not looking good from my point of view long term here on steemit. The price may never recover. Certainly not in BTC value, in my opinion. Maybe it will climb in dollar value, but never to those ATH again by the looks of it, but that is just my bearish sentiment at this low point in the market. If the whales or OGs of Steem can organize a fix and fill the cracks in a flawed design then I will be more hopeful.
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I've been buying about double that for the past few months, and climbing up the rankings, I'm now a top 1000 account, the problem is there is hardly anyone buying.
So many people just aren't prepared to invest, at least not ATM!
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Or just super disappointed....
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I'll L
Posted using Partiko Android
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Great math and concept it will help if the community had more trust in the company.
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Dear @dtrade
Great choice of topic. Indeed there is huge selling pressure coming mostly from Steemit Inc.
Unfortunatelly most of their expenses are in FIAT currency so it's most likely harder and harder to cover those costs since price of STEEM is constantly dropping.
At this selling rate, within a year STEEM won't be worth less than 0.1$ and selling those 800k STEEM will not help STINC much.
Will actually anything change? I'm seriously not sure. After all their funding can go from different source, but it will still be sold on the market (creating selling pressure).
Yours
Piotr
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