For the last few weeks I have been telling myself that the price of Steem and the current downtrend is completely irrational. My problem was that I was trying to analyze Steem's price like I do with other cryptos: looking at total coins in circulation and the amount of users and interest around the coin.
For instance, imagine there was 4,000 daily active users on Litecoin's subreddit and forums, lots of posts and projects around it like steem has and only 10 million coins in circulation, for me that would be a very strong BUY signal.
The big difference is that Litecoin users are also investors, if you go to litecoin's social sites and publish you are probably a holder of LTC, but in steem most users are not Investors, instead of buyers and holders, they are mostly sellers.
Yes, people blog, publish amazing pictures and sell the Steem and SBD they receive for it. This is why the price is falling, there is more sell pressure than demand. But why do people sell?... its simple:
We are so used to giving out our content for free that when we get paid for it we do not value it.
So there is a big psychological aspect that is driving steemit users to sell their gains, but how about speculators and traders?... maybe they can pump steemit, right?...
WRONG again, traders know for sure which accounts are powering down and transferring funds to exchanges, there is nothing hidden on the blockchain and most large accounts are selling, if you are a smart trader what do you do? you short! short! short!, in fact traders love an easy short like steem, if you sold at $4 and $3 you could have bought back all your steem (and Vest) for a much lower price now and nothing is better than making profit without actually reducing your initial investment.
So what can we expect for the future?
Like @dantheman has said in the some of his posts, no asset goes to $0 and I am sure Steem won't be the first. You don't believe me?.. go to poloniex and checkout the highest volume coin today .....ok I will tell you, is POTCOIN!!
So we know Steem will always be worth something, but what would it be?... well I can't answer that, but you can ask yourself these 2 questions:
- At what price would you stop selling?
- At what price would you consider buying?
The accumulation of those answers may give us a hint of where we are heading. In my case I already stopped selling and I even powered up today a little today, as for buying I am ready to throw in a few BTC if I see the price go near or below the $0.25 line.
How about you, ready to stop selling and do some buying?