Will STEEM be worth 6X as much (as compared to BTC) by the end of 2018?
To date, one BTC has only been able to buy more than 8,000 STEEM three times for fairly short time-periods. After the previous two occasions, STEEM has increased in value by 5x or 10x (compared to BTC) within a few months after crossing the 8,000 threshold.
Introduction
The other day, I posted an Obligatory post about the price of STEEM. Today, I thought I'd take a closer look at some of the raw numbers.
As I mentioned before, it is very unusual for a single BTC to be able to by 10,000 STEEM - or even 8,000. According to data from coinmarketcap, one BTC can currently buy roughly 11,900 STEEM. The most recent peak was just yesterday, at 11,992.44. There's no telling the future, but I thought it would be interesting to look at previous peaks in some more detail.
I like to look at STEEM vs. BTC instead of STEEM vs. USD because this might filter out some of the changes that impact the whole cryptocurrency sector.
First, here's the graph again, with coinmarketcap data updated through yesterday's closing prices.
So, just by eyeballing that graph, we can see that BTC is at an unusually high value as compared to STEEM.
To elaborate on that, by viewing the right-hand column of the descriptive statistics below, we see that the median value is 3,633, the mean value is about 4,361, the third quartile is about 6,297, and the skewness is positive (which means that the data tend to cluster on the low side).
These data aren't really independent, so you can't read a whole lot into it, but it does give a description of the past relationship between the two cryptocurrencies.
I thought it would be interesting to go back in history and take note of the the prices at earlier times when BTC's value was at a relative high in comparison to STEEM. In particular, I thought I'd look at the buying power of BTC in terms of STEEM when it crossed thresholds at 2,000 and 8,000, as well its peaks. Starting from the first time it crossed 8,000, here is what I found.
| Date | STEEM per BTC | Threshold |
|---|---|---|
| Feb 18, 2017 | 8726.33 | Above 8,000 |
| March 12, 2017 | 16,923.18 | Peak |
| May 8, 2017 | 1,673 | Below 2,000 |
So in Feb of 2017, one BTC could buy 8000 STEEM. That value peaked in March, and within 3 months it was below 2,000 again. The drop to 1,673 from its March peak was a 10x improvement (for STEEM). Ignoring fees, if someone had bought 16,923 STEEM in March and sold them in May, they would have turned one BTC into ten of them. If they had bought 8,726 STEEM in February, they could have turned one BTC into five.
At this time, BTC was going through a generalized increase in value, and STEEM was near all time lows. The ratio fell back to lower levels when STEEM bottomed out and started climbing again. On May 8, BTC was worth $1,723, and STEEM was $1.03.
The next time the ratio crossed 8,000 again, we see this:
| Date | STEEM per BTC | Threshold |
|---|---|---|
| November 2, 2017 | 8,030 | Above 8,000 |
| December 6, 2017 | 11,165.23 | Peak |
| January 3, 2018 | 1,893.03 | Below 2,000 |
As before, someone could have turned one bitcoin into four by buying STEEM on November 2, 2017 and selling on January 3, 2018. And they could have turned one into five in a month if they had bought on December 6, 2017 and sold on January 3, 2018.
At this time, BTC passed through its all time high about 2 weeks before STEEM did. The ratio fell below 2,000 on the way back down when BTC was worth $8,622 and STEEM was worth $4.49.
The last time the ratio crossed 8,000 again, it hasn't fallen back down below 2,000 again. Here's what we have so far.
| Date | STEEM per BTC | Threshold |
|---|---|---|
| Sep 5, 2018 | 8,041.63 | Above 8,000 |
| November 26, 2018 | 11,992.44 | (?Temporary?) Peak (????) |
| ??? | ??? | ??? |
Was yesterday really a peak (doubtful)? Will the ratio ever fall below 2,000 again? Will it do it in a month? Who knows? Just because these things have happened in the past doesn't mean they'll happen in the future, but if STEEM does drop quickly to 2,000 like it did before, then one BTC's worth of STEEM today would be worth almost six BTCs when it does.
So, the first thing I have to ask myself is whether there is some reason that suddenly made BTC relatively more attractive than STEEM recently? I guess the only factor I can imagine would be the September 25 hardfork? You can use your own judgement on that.
This is not investment advice, but I think it's an interesting pattern to observe, and I have to admit that I am eager to see what the ratio of BTC / STEEM is around the end of the year.
Update: November 28, 2018 @ 1623 US/Eastern - Fixed typo in title. "End of 2018", not 2019.
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Steve Palmer is an IT professional with three decades of professional experience in data communications and information systems. He holds a bachelor's degree in mathematics, a master's degree in computer science, and a master's degree in information systems and technology management. He has been awarded 3 US patents.
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