Why is crypto so volatile so that the difference between the ATH and ATL are so extreme: Steem's case study.

Imagine you bought 2700 Litecoin for $1.1 at the low during the bear market of 2014-2016 for $3000. You somehow had a patience like, Persephone, God of patience and lucky like Tyche, the God of chance, you sold at the peak each LTC at $385. You became millionaire and don't have to work for rest of life.

Cryptocurrency attracts lots of speculators who do not have clue or patience, FOMO to buy cryptos specially very end of the bull market. It is time when dumb money enters, euphoria runs supreme, greed wins and any value is possible.

Imagine how many of you think that Steem is going to be $100, $50 or even $25 when it reached $8.5. How many people able to sell Steem at $8, $6, or $5. Very few I guess.

Interestingly, traders who sold at $8 or $5, may have bought at $4 or $2. Those who are really able to sell at these prices are somehow experts or pros, but not long term holders who bought at 10 or 20 cents or earn them.

Those who bought Steem at 7-20 cents, most have sold around $1 or $2. Since nobody has patience or lucky to hit the jackpot at the all time high. Why people can't sell at close to ATH because their perception got changed. They then thought it was undervalued. For example, at $8 a Steem, most holders were thinking that Steem is going challenge Facebook or Reddit within few years. Interestingly, Steemit ranked around 1000 in the Alexa ranking. Such a promise!

When it kept falling, perception or popular belief was, it was about to come back. The come back never return instead, Steem is flirting with all time low (ATL).

Then why it crashed 13 cents why not at $1. Since there is no FOMO, no new buyers. But there is FOMO to the bottom. Large number of sellers are thinking Steem is going further down when it was $2, $1, 55 cents, even 25 cents. They followed the overall downward trend of altcoins. Basically, there are no new buyers but there are common sellers: witnesses, creators, businesses/developers, very few speculative traders who wan to buy further low, few investors who lost faith and want to get out. Buyers are the mostly die-hard Steemians. However, most of them have run out of gas or fiat. Though I have bought $42K equivalent of crypto, I don't have $5K cash to buy Steem for now.

Therefore, any downtrend ensues, sellers arrive come as usual, buyers dry out we hit another low for the bear run. Sometimes it spike a little bit when few big die-hard Steemians buy in. Steem spiked 16 to 18 cents recently, probably due to @theycallmedan have bought 250K Steem. We only have one such whale. We don't have 100s of whales who buy BTC, ETH or EOS.

This is how the cycle repeats. Steem is at the mercy of Bitcoin and overall altcoin market trend, or if lucky, few big fishes. Right now, big fishes are absent and we are bound for ATL.

Disclaimer: This opinion is not a financial advice, it my personal perspective and opinion. Please seek professionals for financial decisions.

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, trader and blogger since 2013