Why price actions always do not relate to developments: A case for LEO
SteemLEO team has announced DEX V3 with few new features. Usage of @steem.leo front-end, posts and comments are on the rise. SteemLEO frontend is the most innovative and aesthetic among the tribes.
Still LEO's price declined more than 50% in last couple of weeks. It made few tribe members upset and some might have dumped fearing holding bag of worthless tokens!
Interestingly, price of an asset does not always match with the developments. It mostly follows trends, momentum and actions of big players. It has resistance level or ceiling and support level or floor.
When price of an asset reaches a ceiling, traders and sellers flock to sell to take profit. Upward trend breaks down. It creates spiral selling pressure due to FOMO of not selling high. Then the price can go down too much even at irrational level.
There are few buyers at support level and but there are smart money buyers. They don't rush but slowly accumulate without breaking the trend. When the smart money accumulate enough, they may put a large buy walls. At the sight large of buy walls, traders and buyers get back their confidence. The trend moves upward. At this stage, a developmental news has a very positive effect on price. Price overshoot and smart money cashes out.
Few weeks back, wrote a post about a master trader cashing out 10K LEO. He bought at 0.14 Steem and cashed out at 0.22 Steem, by obliterating any buy walls left. He made 60% profit for his LEO trading. On that time Steem was showing some strengths and passed 16 cents from its range of 11-13 cents. Therefore, the trader thought that it was the right time to exit with Steem. Probably he has cashed out his Steem too. Who knows?
It was beginning of the LEO's price weakness. There are also some other co-incidences. There are still few airdrop beneficiaries from PAL members and some early buyers. The rise in price also inspired them to sell.
In last month 7-10 big holders (5-16K LEO) cashed out for different reasons (e.g. 60-80K LEO dumped). It had a spiral negative effect on LEO's price too. One of the reasons is that LEO overshoot to 0.3 Steem and Steem was doing well.
They are short-term holders, most are airdrop beneficiaries (i.e. no incentive to hold since some of them have not bought LEO for themselves), some plan to buy back lower and some wanted an exit anyway.
If you look into the LEO's price chart, July to September were the months most airdrop beneficiaries exited and LEO crashed to 0.07 Steem. There were 15 PAL curators who got minimum 30K LEO just free. Some of them cashed in like the end of time.
After that there were few big buyers (including me) who raced to make large holding. This buying pressure and positive trend created a momentum to push LEO to 0.3 Steem.
On that time, there was a conversation on discord among community members that days of 0.2 Steem worth LEO are gone. The year of 2020 will be a year where LEO may never go down from 0.2 Steem.
However, Market is very much unpredictable. How does trend forms and it gets momentum is pretty much unknown and more than Science.
And, @taskmaster4450le said it well:
The numbers keep improving while the price is dropping. This shows how markets operate separate from what is truly taking place.
I would recommend to read @taskmaster4450le's latest blog on SteemLEO's recent developments and @aggroed's blog on how market works. @aggroed even jokingly ask to set up buy walls or sell walls to manipulate SE tokens!
In conclusion, Market has its own mind. @steem-leo is a top tribe or DApp on Steem not due to its price actions but for its developments and dedicated team. However, recent price actions may have attracted a large number of traders who may have made some profit. Or, some traders may have lost few steem playing it wrong. In the big scheme of game, SteemLEO will have bright future. Even we can get a clue on LEO's future by looking at how many investors want to cash out, there are very few with big stakes, there used to be more number of people.
However, it can change depending on the future price actions and developments. Moreover, one has to remember that LEO is much more volatile and risky even compared to Steem. It means that either gain or loss will be much higher in fiat-wise compared to Steem. Therefore, conduct your own research before you want to buy or sell LEO.
Disclaimer: This opinion is not a financial advice, it my personal perspective and opinion. Please seek professionals for financial decisions. This opinion is only for educational purpose.
Image sources: Most images are open sourced (e.g. Pixabay, Wikimedia etc.) with Creative common license. Some images are used with due courtesy to respected owners.
Thanks for reading.
@dtrade
Cryptominer , occasional trader and tech blogger since 2013
Another great article @dtrade.
I just keep adding and staking. I have yet to sell any LEO since I decided this was a token to hold. After selling my initial earnings (while hodling my airdrop), I reversed course about .08 and have not changed. Every LEO I touched since that point is still with me.
As for the gist of your article, I agree completely. The market action does not reflect what is taking place with Steemleo (the same is try for STEEM). It will switch in time but, for now, I just keep adding.
Thanks @taskmaster4450 ;)
Another interesting thing was while I was buying during August-October, there were more sellers who occasionally come up and sell on the buy walls and crash it down. It means that buying large number of LEO (e.g. 10K LEO) was easier.
Now 7K buy wall is sitting for 5 days and buying up 10K LEO from the ask side will take price to 0.23 Steem. It means that it would be harder for new players to make big stakes without paying premium. Moreover, there are few forced sellers. These long trail of asks are mostly from traders who bought lower and want to make some profit.
We are lucky in that sense that we are early adopter. Moreover, LEO has come long way even price wise.
Markets are very hard to predict, and as we can see here big players can make an impact.
Something I have noticed for se tokens but for crypto in general as well, is when the go up, they usually go up much more than you expect, and when they go down they go down more than you expect as well.
Like nowbody could imagen that steem will go to 0.12 cents when it was 1$ or 2$. I guess now people think the same for the up trend, but who nows what we can see.
Yes, they are just more volatile in both directions. Steem went from $1 to $8.5 in three days. From current low price point of Steem another 200-300% gain will be quite possible. It means possible gains are bigger if it is timed correctly or vice versa.