Why STEEM Falls More Than Other Tokens
Many noticed that Steem went from having a market cap in the 20s, overall, to now it is ranked in the 50s. This drop is at a greater rate than most other tokens.
Some believe this is a reflection upon Steem and what is taking place here. After all, how can someone like myself sanely state that it is a top 5 blockchain when the price is dropping more than everything else?
To start, there is no correlation between price action and what is taking place on a blockchain. People like to draw parallels because it helps them to make sense of it all. The truth is markets, especially in the shorter term, are their own animal. They carry a totally different psychology driven by greed and fear.
Nevertheless, there is are a couple valid reasons for why STEEM behaves in this manner compared to the rest of the market.
The first is the fact that Steemit Inc puts a lot of downward pressure on the price by selling to meet it's financial obligations. While this can be a good thing in the long run because it further decentralizes the distribution, it does impact the price.
There are also individuals who do the same thing because they use the token to pay their own bills. Here, again, we see an impact.
The second reason is the design of Steem itself. We have a system where people can get STEEM as a reward for their actions. Many people come to Steem and start posting, earning themselves some tokens. There are many who power up but not all.
It is a different concept than many of the other blockchains out there. So far, the typical way to get a coin is to buy in. We need to bring either fiat or another cryptocurrency to the table. This means that almost everyone has skin in the game.
Here is where we see human psychology take over. For some reason, when someone bought an asset like a token, they are less likely to sell it when things are going south. There is something about our egos which will not allow us to admit we made a mistake. The best traders in the world are the ones who can unload a position the second it goes against them. Average people who lose money trading do the exact opposite. They sell the winners and hold the losers.
Now bear in mind that being a long-term hodler of a particular token because of the belief in the potential over the next decade or so is a different matter. I am referring to those who are willing to sell based upon price action.
Steem pays out a lot of tokens each week as a reward. Many people have tokens based upon their efforts as opposed to their cash. We also have the situation where Steem had the absurd 100% inflation for the first year which netted many early adopters a massive amount of STEEM. Once again, psychologically, there was not a lot put into getting these tokens.
Even earning STEEM, while effort, can be seen in a different light. Do most look at writing posts and putting up some comments as "work"? It is not like one is spending 8 hours on a hot roof in return for the STEEM. We value our paychecks because of the work put into them. While there is effort put into Steem, I do not believe most equate it the same.
This means that people are willing to dump. When you have a situation where people did not put either money or massive effort (in their minds) into acquiring the tokens, their tendency is to sell. Why hold on? Obviously, I think this short-sighted thinking but many do not agree with my outlook.
Hence, when you think about it, one of Steem's greatest strengths, becomes a liability in a bear market. The fact that anyone can join Steem and earn tokens provides a great opportunity going forward. It also opens up the door for having a lot of STEEM holders who do not have the conviction or dedication to hold through a bear market.
Ironically, the creation of SMTs will only increase this problem. Can you imagine what would be happening to those tokens if they were openly traded right now? Since many were either airdropped or received as bounty, the dump rate would be incredible.
It is, after all, money for nothing.
If you found this article informative, please give an upvote and resteem.
Ending the post with DIRE STRAITS thing just hit the spot !
You are quite right that it is Steem's true strength (as a usable currency that can be earned and spent and which gives real utility in an ecosystem) that makes it more vulnerable to price downturns in a bear market.
Of course, in the longer term, the price of a currency is driven by its actual usage and utility. All else is mindless speculation.
This speculative phase of great exuberance and now great depression will pass and in time the really valuable currencies will be those, like Steem, with real utility and a community that is using them every day.
Of course, the utility will have to be created. We can't eschew corporate accounts or advertising here forever. What we need is more of the likes of @coingecko. Coingecko converted three bitcoins into STEEM and powered up, not for the purposes of earning more STEEM and selling it for fiat but in order to create a presence on Steem and market itself. Why haven't more crypto companies created a Steem accounts to promote themselves to Steemians, a 100,000 strong community nearly every member of which into cryptocurrencies? Why hasn't Steem been marketed to them?
It depends what you mean by advertising. What Coingecko did is what we want. You can promote your product already by writing good posts and investing in Steem.
Corporate accounts are already possible. Multisig is available at blockchain level. Just needs to be implemented in front ends.
Posted using Partiko iOS
I mean an app elling ad space and pulling user data to target the ads better. Such an app would be much less or not at all dependent on free delegations like so many other apps. Such an app could fund its own growth and potential create a lot of buying pressure on STEEM.
The reality is that most assets in crypto are being impacted by the bitcoin price declines and will lead to a sprial lower as more projects start to fail and not able to complete their project. However, it will ultimately lead to consolidation in efforts into projects across the blockchain realm which will accelerate development and adoption.
Posted using Partiko iOS
Steem is practically unknown to most bloggers and social media followers out there.
Unlike most other social media platforms where signing up and on boarding is easy, it is not so in steem. The learning curve is steep compared to the other social media platforms. Therefore it will take a while before people get used to steem. Once a critical mass is reached, steem will certainly take off.
Personally I am hodling for the long term.
i see it in the same way. when a critical mass is reached, bigger players (investors) start to join and the token is well distributed it will succeed.
Hi Taskmaster From @super-grand-ad
Upvoted, Resteemed, Replied. Already Following
I have watched my steemit wallet
Estimated Account $ Value get Lower and Lower.
My steempower remain the same.
My STEEM DOLLARS Remain the same.
I have not sold off any of my steem since joining.
And I have watched it Grow in token form
Because the $ Value has Fallen it will cause panic.
For those that wanted a get rich quick plan just
go and put a bet on a horse of a different kind.
Steem is a long haul Bet that has to be ridden all the way.
Have a good Day From @super-grand-ad
Excellent article. At this point most of us are simply waiting for better days. I have been buying Steem and I have Powered Up everything. I hope it pays off.
But even if it doesn't, it still was a better option than to sit on ETH.
I am looking to make another buy also. STEEM hits 20 cents (or even close) and I will buy another batch.
There are a lot of other benefits to Steem over just the value of the tokens. Look at this excellent article that was posted this morning by @apshamilton.
https://busy.org/@apshamilton/steem-is-delivering-me-a-fantastic-roi-why-i-m-buying-steem-and-powering-up
I never surrender, I keep on writing, I am not affected with the downturn but it gives me challenge to move on and wait for a good time.Whatever it takes, I have no regret, steemit is so special better that fb.I am here because of the people who share and building a good community.Yet, I believe there will be a sunshine after the night.
Posted using Partiko Android
I do not power up but rather donate my earned liquid Steem to contests as it helps community grow more. But powering up would be my second choice. Definitely not selling.
Sadly, there people who do not believe in this platform and only take from it without giving, without having their own skin in the fame. They don't care about educating themselves about the intricacies of this blockchain and crypto in general.
In short, they are not risk-takers.
But for prices to appreciate someone has to buy.
As a rule, these people don't deserve to be successful here when the bull market starts.
Posted using Partiko Android
What we need are more pairs with STEEM. We only have a handfull of exchanges that even offer STEEM. Many of those exchanges don't offer multilingual options. Add on he fact that STEEM trading pairs are extremely limited makes convincing other currency holders to switch to STEEM very difficult. For instance, you go to one exchange and the only STEEM pairs are BTC and ETH and nothing else. Hop on another exchange and there may only be BTC trading pair.
While other people that have never used or bought STEEM may never get the opportunity to experiment with STEEM, because their preferred currency doesn't trade with STEEM.
I want to start an exchange that pairs STEEM with all other major cryptocurrencies, but with no fiat pair (at least for now). This would be the first of its kind to marry the power of a social media platform with an exchange. My exchange will leverage the existing userbase of STEEM as my exchange caters to STEEM users. The STEEM network can leverage the exchange to gain 10X the users STEEM has now. Most major exchanges have over 10 Million accounts. Some have done this within a year. STEEM has been around for two and a half years and barely broke 1 Million accounts. Just imagine an exchange that can draw huge numbers of users in which their trading utilizes STEEM as the central trading pair. This will introduce those people to STEEM and eventually they may want to open a STEEM account to store their STEEM off the exchange. Eventually, they will realize that STEEM is the best use as a currency as they can transfer it for free and extremely fast. When bitcoin traders move currency between exchanges, they don't use Bitcoin, they use litecoin. Why? Because it doesn't have the burden of high fees and long transfer times. STEEM is much faster and FREE. If STEEM becomes that conduit to transfer value, then eventually people will start to realize that STEEM is the best currency. The reason that people don't stick with Litecoin is because it doesn't offer them anything else. It doesn't have a social media system. It doesn't give people the opportunity to power up to increase their influence and earnings. There are a massive number of cryptocurrency owners and investors. This exchange will tap into that group and convert many of them into STEEM account holders.
I cannot do all of this on my own. I need developers, volunteers, and investors to get this exchange started.
Hey brilliant idea @socky. I'm no expert and new to Steemit, but I love blockchain technology and crytpo as well as creative writing so the Steem project really appeals to me. I would be happy to offer my moral support and perhaps there is a place that i could assist in your grand venture. Will work for crypto, or even volunteer if needed to further a revolution so hook me up.
Thank you. Hopefully I can get this concept rolling soon.
Great post! i believe that this is a phenomen of the early stage and bear market combined. imagine in the future it will be much harder to earn one steem and the market is in a uptrend and the Steem price is increasing or beeing stable. people will realise that if they hold their stake they get a stable return on investment. Those who don't realize that this economy works like this are going to have a hard time to succeed here.