In case of Steem, there are two main reasons that have been responsible for its rise and fall. These are the movement of Bitcoin and the interplay between supply and demand.
First, we have to understand all altcoins, Steem included, rise and fall with Bitcoin. This is because the cryptocurrency market is still small. As of today, Sept. 7, it only worth $203 Billion dollars in terms of market capitalization. When you consider that more than 50% of this is in Bitcoin, which is at $112 Billion USD in terms of market capitalization on the same day, it will not be a surprise that most fiat to crypto conversions go through Bitcoin. This creates a bottleneck in the market, such that for most people, in order to buy or sell Steem, they will have to go through Bitcoin. The result is that the price of Bitcoin creates a ripple effect that reaches the rest of the altcoins.
Thus, as you can see in the past few days, Steem went up in price, reaching almost above $1 just as the price of Bitcoin was going up past the $7,000 mark. Then, the same thing happened when Bitcoin's prices went down again. This movement was due to the ripple effect of Bitcoin's price. This should also explain why most cryptocurrencies are in the green when Bitcoin is in the green, and most are in the red when Bitcoin is also in the red.
Next, another factor responsible for the rise and fall of Steem is the interplay between supply and demand. This is a little tricky since a lot of things could affect supply and demand. For example, when SMTs were first announced about a year ago, there was an increase in the price of Steem, because the announcement created a lot of excitement over it's potential. This, in effect generated a demand for Steem and, as a result, prices went up for a little while.
There are other factors that affect supply and demand. Hopefully, the upcoming Hardfork could create a positive sentiment all over the blockchain and encourage the demand for Steem, once again, so that the price could pick up.
Source:
- Coinmarketcap - All charts. https://coinmarketcap.com/charts/
- Coinmarketcap - Bitcoin. https://coinmarketcap.com/currencies/bitcoin/
- Why bitcoin and other cryptocurrencies can rise and fall together. https://blog.sendwyre.com/why-different-cryptocurrencies-rise-and-fall-together-d1de1e52e183
Thanks very much. This is really informative.
You're welcome. I'm glad you found it useful.