In the cryptosphere, speculations play the greatest role in determining the price of an asset. Most times, people only buy crypto assets in anticipation that prices will go up. Similarly, they tend to sell when they anticipate that prices will go down. The price of a crypto asset, therefore, is the equilibrium point between the selling and buying behaviours of the players in the market.
The Hive token, which is now the subject of this essay, was launched only a few weeks ago as a fork of Steem. The hype around the Hive token was so strong that at a point it was nearly selling for twice the price of Steem. Even now, it is still trading above the price of Steem.
Nevertheless, in the past few days, the price of Hive, it would seem, has been on a disturbing decline. From trading at about $0.30 just a few days ago, Hive is now trading at $0.17. Without bias, this is a sharp decline when measured against the performance of Bitcoin and the majority of the cryptos in the top 20 mark during the same period. This article examines some of the most probable reasons for this decline.
1. Massive Sell offs from Airdrop Beneficiaries
Unlike some cryptos that came into existence through ICOs or mining, Hive came into existence through airdrop based on previously held Steem token at the time of the hardfork. So, the entire economy of Hive came to life through nothing but airdrop.
The interesting part is that before the airdrop, as one would have expected, there was a massive urge in the price of Steem. This was because many were jostling to buy Steem because they clearly knew that it would determine who-gets-what at the time of the airdrop.
We therefore we had massive Hive tokens in the wrong hands, the hands of those who got it solely for the purpose of cashing out. To this people, it is a win even if Hive were to be sold at 10 cents. They'll keep selling until they have exhausted their holdings.
2. The General Crypto Market Sentiment
With the global outbreak of the Covid-19 pandemic, a shadow of certainty looms over all the financial systems of the world. The stock market crashed alongside the price of crude. And cryptos, like most assets, are not immunes from the arising uncertainties.
Therefore, we see a situation in which almost everyone is talking about Covid-19 instead of Bitcoin halving. A kind of lukewarm momentum has remained in the crypto space, leading to wobbling and feeble market sentiments.
Hive can be said to also be a victim. It is not likely that Hive will be left behind had the general market sentiments been generally favourable.
3. The Belief that Hive is Overvalued
There is a queer belief out there that Hive is overvalued. This is because it is a fork of Steem. Many expects that Hive should at best only be equal to Steem and not surpass it. And as long as Hive stays on top of Steem, some believe that it is overvalued and will contiue to sell it.
The actions of the above category of people also play a major role in flooding the market with Hive token.
This writer believes, and for good reasons, that Hive is a fantastic token largely because of the community spirit powering it. Although it may face enormous pressure at this formative years, it has all it takes to bounce back and appreciate -especially as it get to be listed in other prominent exchanges like Binance.
Until I come your way again, I wish you a full Hive ahead. .