What Will It Take To Stop The Price Of STEEM From Free Falling?
As we are hovering near the 20 cents range for STEEM, everyone is wondering what will it take to stop this? How is this going to reverse?
I think the answer to this comes from stripping it down to the basics.
According to Steemd.com, there are roughly 120M STEEM in liquid form out of the total of 320M. Almost 200M is vested, removing it from the liquid market via powering up.
I am not quite sure how much needs to be soaked up to stop this but let us look at a few ways this could happen.
User Base Grows
This is the reason many of us are optimistic about the long term potential of STEEM. It is very simple: STEEM is required to operate on the Steem blockchain, hence more users equates to more STEEM needed. This has to be powered up to provide the Resource Credits which quantify every activity on Steem.
Here we have an option that is long-term. We are not going to see the user base add a couple million overnight. However, doing some basic math, if we add 2M people, each requiring 10 SP to have minimal interaction on Steem, that is 20M soaked up. This along removes 16% of the total on the open market.
Businesses Start Buying STEEM
Here is another alternative that is highly attractive, most likely very effective, and long term.
Businesses tend to have simple goals. They typically want to sell more of their products and services. Steem could be an attractive venue since there is a user base that is becoming categorized. This is very helpful for businesses seeking to reach a targeted audience.
Companies looking to interact with Steem would have to buy the currency as part of the package to operate. @oracle-d is already working on a couple projects along these lines. Businesses have the ability to buy hundreds of thousands of dollars worth of STEEM.
The question is will they? I guess we can say this option is tied to the first one. Businesses go where the users are. The attractiveness of a platform grows as the amount of people using it expands. Here, we kind of see the chicken or the egg scenario.
The Present People On Steem Buy In Quantity
The other day I wrote a post about there being a floor in the price of STEEM. At some point, I feel there is a level where people on here will add to their stake in massive quantities.
https://staging.busy.org/@taskmaster4450/there-is-a-floor-to-the-price-of-steem
Looking at the comments, there are a number of people who posted they are watching closely. There is a price point, which differs for everyone, that is going to trigger some buying. We might not be there yet but it was summed up in this comment by @abh12345.
Ideally, we would see across the board buying with smaller accounts taking the opportunity to add to their stake. At present, $100 creates a Minnow which is much different than 18 months ago when it took $1,000 (I know because I bought some STEEM at $2 in the fall of 2017). The same $1K will make one a Dolphin.
Unfortunately, the total accounts in each of these categories has not seen much of a shift out of the normal trend the last few months. People entering those levels are doing so through normal earning activities. Don't get me wrong, I am elated to see that since it shows people can grow their accounts and are committed to powering up.
However, my sense is that when buying takes off, it will be larger accounts adding to their stake in a disproportionate manner (on a collective scale). It looks like the larger Dolphins and the Orcas are going to be the ones adding.
Applications Start Making Money
It is hard to pinpoint where the selling pressure is coming from. There are always a variety of reasons for people to sell and the crypto bear probably has a large part to do with it.
There is another factor that I think is overlooked. We know that Steemit Inc had been dumping somewhere between 500K-800K per month. Many feel this is stopping with the addition of advertising to Steemit.com plus the cost cutting. Doing some quick calculations in my head, that does not add up.
To start, Steemit.com does not have the traffic that is going to garner a ton in advertising. Even if we give them 2.5M clicks on the ads posted, at a penny a click (which is probably high), that is only $25,000 a month. Add up the cost for a couple blockchain developers, a handful of other employees, Eli, possibly Ned, the AWS bill, legal fees, benefits, and all the other everyday costs businesses have to see if this matches.
Thus, I expect Steemit Inc to keep selling.
But they are not the only ones. There are other applications on here that are selling each month too. Unfortunately for them, even though they had success in the blockchain world, overall it is not that much of an impact. Since most of the apps are still dependent upon the STEEM earned, they are having to sell some regularly to pay their bills.
Obviously, this is not the preferred method of these businesses but it where they are. Again, this is not something likely to change instantly. They are working on pulling other revenues in yet that takes time. I believe many of them will succeed and have business models that are starting to address it. Nevertheless, in the short-term, it is most likely status quo.
I did find something interesting. @penguinpablo put together a weekly report on the liquid STEEM out there. He took a look at the amount on the exchanges which actually makes the situation a bit better.
Of the 120M liquid STEEM, 95M of it is on exchanges. That means about 25M is on Steem in liquid form. This is a combination of those who put STEEM in savings or are just holding it in their wallets. A decent percentage of this could actually be large number of small accounts holding a few STEEM apiece that was never powered up.
Regardless of how it occurred, that removes some of the amount that people are looking to dump (I presume). However, what I find interesting is the STEEM held on exchanges.
Notice the last one on the list.
Steem-Engine has roughly 375,000 STEEM held. It is listed as an exchange since that is what it is and is not, technically, on the Steem blockchain. Hence, all STEEM moved there is leaving the blockchain.
Yet, most importantly, it did not leave the ecosystem. We know Steem-Engine is using STEEM as the pair for the tokens created via the STEEM peg. This means the STEEM is not going to be dumped in a fire sale since it is backing the peg.
Obviously, we could see people starting to dump the SE tokens, convert to STEEM, and then sell that on the open market. However, at least in this post, the amount of STEEM increased by 16%. Since token creation on this exchange is only a few months old, 375K amassed in such a short period is encouraging.
To me, STEEM's biggest sink is the fact that it is required to operate on the blockchain. Activity is what STEEM buys in the form of SP (RC). The ability to interact is the main use case, long-term, for STEEM. There is simply no way around this.
This is why I feel so optimistic about what is going on here. The development we see, tied to the overall growth of the crypto/blockchain world, will see our user base increase over time. Actually, we are already seeing that according to the number, it is just at a pace which is a trickle.
In the meantime, we are dealing with a number of forces that are putting selling pressure on. One can view this as either a curse or an opportunity. Obviously, if one feels Steem is going away and will fail, then there is nothing left to say about that. However, for those who do not believe this, the falling price does provide an opporuntiy.
For me, I have been buying on the way down. I do not view this as "catching a falling knife" because the STEEM I buy and power up is not passively sitting in an account. On Steem, with the compounding mechanism, we can use it in a variety of ways to further our stake. The increase in the voting power is the most obvious benefit.
Time will tell what turns the confidence in the STEEM token around. Which of these factors comes into play, and when, will be determined.
For now, we just either endure, or enjoy, the ride.
If you found this article informative, please give an upvote and resteem.
Easy enough: see who are the witnesses who keep dumping Steem at any price, gather them all at the edge of a cliff... and push them down. There are some leeches and scammers in the top of the witnesses list and I, for one, can't comprehend how these jerks keep being upvoted by the community and by the other witnesses.
What have they ever did for the community? Oh, a bidbot? That's all they ever did? Meh.
Be careful; or Lord Butthurt will flag you.
"Trouble" is middle name. 🙃
Which one though?
What is this STEEM-as-a-Service thing STINC has going on? Will it help at all?
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It could.
That is a partnership through a company called Morpheus. They advice companies that are interested in getting into blockchain as part of their business yet are not sure how to go about it. My sense is Morpheus looks to provide turn key solutions.
They partner with a number of blockchain, Steem now being one of them. Hence, the companies they are working with can describe their parameters and Morpheus will guide them to the one that fits their needs. They will then handle the setting up of the app on that blockchain to get that company going.
What it does, in my view, is at least gets a 3rd party referrer talking about Steem and, if the situation fits, guiding them here. From what I can see, most of those type of entities steer companies/projects away from Steem.
GIMME THE CHEAP STEEMS
Buying and powering up all the time is just a good strategy if you are a lifer here. Like me. These times are just extra exciting because the prices are so muc h better for us doing it. Plus, all the neat stuff with the tokens and the signs of life coming from steemit.
BTFD!
Plus, 10x is now only $2!! I can imagine STEEM headed back there much more easily than BTC can hit $111k or ETH hitting $2.1k Much better investment and it is active while it is staked. Awesome.
I keep reminding myself of the old truism that you can fill a bucket of water with a dripping faucet... and yet nobody would knowingly set about filling a bucket of water with a dripping faucet.
My point? Every single day, there are thousands of users who cash out and power down because "Oh look, I have 10 Steem, let me take that out and use it for a movie!" rather than just powering up and actually investing in the platform. These tiny amounts of Steem may seem inconsequential on an individual basis, but if you consider that they go out as thousands of sell orders daily, it puts constant and tremendous downwards price pressure on Steem. Even if just half those people started powering up instead of cashing out? That oversupply of liquidity would start to dry up, and buyers would start to exceed sellers... and we all know what that does...
People who are living in struggling countries have a hard time going from post to eat to post to invest mentality. All things being equal this is what could allow them to bootstrap themselves out of poverty.
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How many small transfers of Steem by minnows does it take to equal one day of Steemit powering down? I disagree with your premise, and the evidence that it is whales selling the vast majority of Steem - not minnows - is on steemd.
Feeling is mutual, I wish more ppl would see it that way. From a long term perspective instead of a quick crypto buck (:
Cheers !BEER
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I pretty much feel the same way but at the same time, can’t fault people for losing hope. We can’t even get along amongst ourselves here. It’s embarrassing when I bring a new user on and they see the petty drama on here.
I’ve been buying in chunks since $3.20 and I’ll be buying a bit more this week.
I am with @abh12345’s comment you highlighted. I think that the big dogs will keep filling their bags as it drops. I know I will. (Not that I’m a big dog)
I just wish that other folks would do the same. Purchase a bit, power up, and spread the love while working on building their community. I can’t fault them at all for not doing that but a man can dream.
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Yes, the drama is strange. If one doesn't live his platform, why talk shit about it? Let them leave and go where the grass seems greener (for a while).
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Supply and demand dictate price, more and more people are coming up with ways to use their steem. Hopefully the demand outpace the supply. I'm buying as Steem has greatly improved in the past year compared to other chains. Hopefully price stays low so I can get to 25k by year end.
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10 SP minimal holding for 2 million users is one of, if not the dumbest things I've ever seen on this platform. This asinine offering is so delusional and out of touch it makes it difficult if not impossible to read the rest of your incessant and redundant ramblings. Officially unfollowed, you only ever say the same shit over and over almost daily. Do you not realise you've said all of this in one way or another 1000 times already?
Nobody has the pure don't give a shit to not pander to the shilling attitude that I do to say it, but seriously at this point this cheerleading is spam and I'm flagging it for being redundant! Of course you will continue to play your role here despite what I say and since you've never once had any interaction with me I'm fine pretending you don't exist. But, I'm sure I'll drop some of my increasingly worthless flags during my powerdown to 100 sp which is 10x the unrealistic and stupid figure you pulled out of your ass to start this long-winded shit post ! Good riddance!
!dramatoken
Ouch.
Ding, ding, ding,...
!popcorn
But, how do you really feel?
XD
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I know what is going to happen with BTC, so it is just simple math.
Even if alts will on average only receive 0.3% of the money that will be invested in BTC, even then we will see 10+$ Steem again. It is that simple.
All it takes is time and further developments (like fixing the onboading issue) and the users will come.
I am disagreeing in the fact that Steem in steem-engine leaves the blockchain. Steem Engine only creates a virtual blockchain which replicates operations recorded on the Steem one.
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Yeah, the Steem-Engine ecosystem is totally separate from traditional exchanges. No one hops on Steem-Engine in order to buy BTC/LTC/ETH etc. All the Steem that flows into Steem-Engine raises Steem's value by taking it off the market.
I agree, however it is possible to exchange steem for other coins on steem-engine. If that segment of the market grows then it will be like any other exchange.
Technically no amount of steem ever leaves the blockchain. It is just transfered to an account that is controlled by a third party. In that sense steem-engine is just like any other exchange.
That's true, @apofis
@burnpost disagrees with you.
Of course you are correct, that would be one of the exceptions to my statement. The other exception is when the keys for an account are lost, although in theory in this case it is still possible to unlock the account again but in practical terms we can consider the funds in those accounts as burned.
Make a big ol' bonfire, throw in 50 million Steem in. Bring hot dogs to roast.
Business will not buy anything. But to make money on your naivety may well. For example, an rt-international account is successfully used by the community. Moreover, they are sponsored by the Russian government. Did they invest a lot in Steem?
They did not even want to advertise steem a fight on the site or twitter. But money is not forgotten. And it's a multimillion-dollar company.
I see more reasons, why the price keeps falling...
thanks @taskmaster4450
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It's kind of breathtaking to me how poorly understood HF21 is. The downvote pool will increase the available flags by 25% at no cost, and the largest flagging force on Steem is Bernie and his bots. Anyone who's paid any mind to Bernie will be aware of how and why he flies flags, and the impact he has had on his targets. In the flagwar with @fulltimegeek, FTG has been completely censored on Steemit, and it's important to note that many consensus witnesses vote for NextGenCrypto, Bernie's witness.
The history of downvotes on Steem is available on the blockchain, and you can verify these facts for yourself. Bernie was not brought up by folks touting the downvote pool, and the history of flags on Steem does not bear out any reasons touted as recommending the downvote pool.
Bid bots extract rewards into the wallets of their funders, and this includes @freedom, consensus witnesses, and many of the most substantial stakes on Steem. Extracting rewards in this way keeps them out of the wallets of less substantial stakeholders, and decreases the size of the market for Steem. Note that EIP in HF21 will decrease author rewards by half, and increase curation rewards proportionately, as well as affect a semi-exponential rewards curve, which will further increase the weight of substantial stake versus lesser stakes. It should be noted that flags and witness votes are stake weighted too, so this will increase the damage flags do, and increase the control of the whales over the witnesses, both directly discouraging broader adoption of Steem and retention of current users.
All in all, every aspect of HF21, but particularly the downvote pool, will increase the concentration of stake in the wallets of those with the most of it, and discourage new users, extant users from remaining active, all of which decrease price pressure on Steem. HF21 is exactly the opposite of what needs to be done to increase the price of Steem.
IMHO @fiveart called it.
I am not happy about this, and will be most happy to be proved wrong, by Steem price increasing, market cap rising, and number of active users growing, but the opposite is true as the market prices in HF21 now, and many large stakeholders, like @steemit, powerdown and prepare to divest asap. I'm not gonna blow smoke up anyone's skirt, and desire folks to do due diligence and exercise prudence in the management of their assets.
All this information is available from steemd, and I recommend folks have a looksee at who mined their stakes, who is powering down, and who votes for Bernie's witness. I did this morning, and found out my proxy was supporting that witness, so changed my proxy. I should have done that a long time ago.
HF21 implementation approaches. Best be prepared.
Hear hear
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The reality is that the risk/reward continues to be quite attractive and despite me having thought I would stop my purchases, the undervalued amount continues to keep me close to buying more at each chance I get.
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I would like to float two ideas for boosting participation rates for existing members and for attracting new members to the platform:
Idea number one. Steemit implements a mechanism that allows subscribers/fans of content creators to make direct donations, think Patreon, etc.
Idea number two. Give those with entrepreneurial aspirations the tools necessary to sell and manage Merch through the Steem blockchain. This includes marketing, inventory control, communications, and other basic business activities.
The point I'm trying to make is Steemit Inc. should demonstrate clear opportunities and incentives for people to join and and educate the public at large of the rewards to be had for consistently producing quality. This will, in my opinion, increase the value of Steem and the market price should rise as a result. These ideas should be considered longer term solutions.
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