Have you noticed recently how expensive the STEEM currency has become relative to SBD? A few months ago, you could purchase STEEM with SBD at a steep discount against the open market price. But that changed dramatically as STEEM went from a few cents a pop to once-challenging the $3 level.
That the discount lessened as the Steemit bull rally commenced at a clip rate is totally understandable. With more demand and less supply, economic law dictates that the price rises. However, as STEEM is presently correcting, why hasn't the SBD to STEEM ratio adjusted accordingly?
Over the past few days, I've noticed this ratio first approach parity, then hit parity, and then actually go "inverse parity." This simply means that the open market price was cheaper than the SBD price for one STEEM coin. For hardcore cryptocurrency traders and Steemit powerhouses, there's an arbitrage opportunity to be exploited.
At time of writing, SBD only offers a 4% discount against the open market price. This is disconcerting to many Steemit users who came onboard earlier this year. Will this situation ever correct itself? I believe it will, but it may also take some time:
Extreme STEEM Pressure
Steemit claims that one dollar of SBD should always equal around one USD, give or take a small margin. But against the STEEM coin, the fluctuation is incredibly wild, defined by periods of extreme overvaluation, and prolonged periods of undervaluation.
Currently, we're in a period of STEEM being overvalued relative to SBD. That means that a relatively higher amount of SBD is necessary to acquire one STEEM coin, irrespective apparently of the open market value of STEEM.
But because STEEM value was below parity (relative to SBD) between the end of summer last year until roughly a month ago, Steemit dollars may need extensive time to reach an "equilibrium point."
What to Do?
Unfortunately, there's not much you can do as a regular Steemit user. The market is the market and we have zero control on how the mass investing public interprets available data.
That said, the most effective way to beat this setup is to actively look for the dips. Two days ago, the Steemit cryptocurrency was on a steep discount relative to SBD, moving as low as a 1:1 ratio.
As they say, that was music to my ears! I loaded up the boat, and I hope my fellow Steemians did the same. The opportunity was open for only a few minutes, and by the following day, the "parity discount" slipped by about 10%.
One-on-one? Bring It On!
It appears that the days of sub-dollar STEEM is well behind us. My idea is this -- anytime the STEEM cryptocurrency approaches the 1:1 ratio with SBD, jump in. Even if it's a little off the ratio, jump in.
To paraphrase Jordan Belfort, the only regret I have is that I didn't buy more!