The STEEM price has been taking a dive of late but this could be the best thing that has happened to Steemit since the start.
Speculators and manipulators provide a function in the financial markets. They provide some liquidity to the system. The issue with them is when they have a disproportionate influence over a market.
Pump and Dump
I hadn't heard this term until I came across cryptocurrencies but they have been prime targets for a such scams, at the expense of great projects.
Practically every digital coin has gone through this pattern at some stage
- The sharks purchase the coins and head over to to the forums and chat boxes to talk up their coin.
- They may use several different accounts and groups may be involved
A buzz will be created then the pumping starts
- The chatter picks up on trading platforms, it may even get media attention
- Regular people start purchasing the coin and pumping the price to the moon.
- Once the coin hits a high point, the sharks will start selling off. This can happen in a matter of seconds or be dragged out over hours.
Once the sharks are out, a panic sell begins, this is when the dumping starts.
- This fuels a downward spiral panic sellers will sell below the market value just to get out, and this can send the coin’s value crashing to the floor. It can even spell the end of some projects.
(They greedy sharks may even profit from its fall in price by shorting the coins on the way down.)
Time for a Spring Clean
Steemit is different to other coins because it has a long term investment model in the form of Steem Power. People locked up with this investment were previously not able to liquidate their holdings over a short period of time. This meant that initial investors, some of which were certainly speculators, could not sell out quickly when the price went high. The current price drop may only be these early speculators cashing in. The rules of the long term investment changed in December and its now only locked up for 3 months.
It's a great time of the year to plan for the future, clean out the old deadweight. The shortened power down schedule (to 3 months) gives people who no longer have an interest in Steemit to get out and dare I say it this will include people who had no real interest from the start and who were only in it to make a buck.
Full STEEM ahead
I think it's great that these sharks are leaving. They will now have less influence over the rewards and people who really believe in the platform can take over. Steemit is still in Beta, there are tweaks and debates happening all the time. The pace may be too slow for some but the developers and witnesses are doing a great job and since I joined 4 months ago I am seeing steady improvements. I am in it now for the long haul.
Image Source: https://pixabay.com/
More valuable than ever
As I write, this is my second article today. The content is growing here with each passing day and this is making, long term, STEEM more valuable day on day. Join us here today, share and read some great articles, and keep the faith in STEEM.
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This article is not intended to be financial advice or encouragement to buy or hold STEEM so do your own research if your thinking of investing any money.
Thank you for reading this. I write on Steemit about Blockchain, Cryptocurrency, Travel and lots of random topics.