You may have noticed recently that Steem's price has been falling off a cliff. Since peaking at over $4 in late July, the price has been following a downward trend and is now under $1. So why is this and what can you expect?
What it was like pre-payouts
Before July 4th, Steemit was a very small, interesting and rather insignificant project for most of us here. There were a few cryptonuts here, a few people from Bitshares as well as people like @stellabelle who were contributing some great, incredibly varied content.
It was very much a small community - everyone was really there because they had something interesting to say and contribute. We saw these dollar numbers for our article. But it didn't really feel real. We couldn't really see or access those numbers, we were just getting some cryptocurrency at some point. But we were more interested in helping each other and contributing than thinking about dollar signs.
Then Steemdependence day came
On July 4th, everyone's articles were paid out. And wow! We suddenly had all these Steem Dollars that we could sell on exchanges. We also had a bunch of Steem Power - which was like having shares in this amazing new social network.
At this point the price was lagging around $0.10-0.30 cents/Steem.
All of sudden Steemit got press from CNBC, The Guardian, Yahoo Finance, as well as the Cryptosphere. We had all kinds of high-profile guests sign up. Unsurprisingly the price went through the roof. The site went from 50 signups a day to over 2000 signups/day. It was nuts. The price rocketed. $1, $1.50, $2, $3, $4. I think there were some brief moments where it reached $5. But whatever.
The Steemship was overhyped
While the site was (and still is) growing rapidly - the valuation went up too fast. It was overhyped, there was a lot of speculation and "hot money". It didn't justify a 30x price increase in the space of a few days.
The long-term fundamentals of Steemit still look great
Steem as a crypto-currency is way better than bitcoin on so many levels. It can handle more transactions. The social network element of Steemit is the "killer app" that will bring in new users to cryptocurrency.
Steemit is an amazing social network too. It rewards developers/creators/contributors/storytellers for building additions to it. Then it gives rewards depending on the votes of people who've earned and contributed the most.
On a deep deep level Steemit is built to be self-sustaining, self-growing, self-powered. It's in it's DNA to evolve, grow quickly, solve problems and deliver lots of value in terms of content/engineering.
However in the short term I feel Steem has been way too overpriced.
"Hello gold-diggers!"
Many people have signed up to Steemit as a "get-rich-quick" scheme. They have only thought about "me me me", without offering any original content, ideas, community support, promotional help. Anything.
Unsurprisingly, they've only earned change for their posts. And boom! They get mad. Then they post about how Steemit's a scam. Blah blah blah. They just didn't provide value for the group. They had nothing to say. So they earned nothing. Nobody is going to pay for you to whine about how you got paid nothing for whining.
I've been powering down
I have no shame in admitting that I've been powering down the past few weeks. I felt like the valuation was too high. I also needed the money to pay off debts.
I expected (and even wanted) the price to go down. Mostly because that would flush out the speculators and get-rich-quickers. And the people who stick around are the ones who contribute and who are genuinely interested in seeing Steemit grow as an interesting social network.
What's next
At the current price of $1 steem, I don't feel it's THAT overpriced. It probably has further to fall, but I suspect it will recover. There's still a lot of momentum here. The regular contributors are still contributing regularly. There's some marketing campaigns going on, people share it with their friends. Google is ranking the best articles (bringing in new traffic from search). High profile bitcoiners and other big cheeses are coming on board.
Like all growth, there are periods of expansion and contraction. We're just in a contraction phase at the moment where the wrong people are leaving..
I believe that soon enough we'll be in a phase where Steem takes off again.
I think the catalyst will be someone super-high profile joining
When someone like Julian Assange arrives Steem will go to the moon. Get him to write an article "How Killary Clinton tried to assassinate me" - and voila. The world's press will be crawling over this site and giving this site tons of indirect attention. Steemit's infrastructure and community will grow at an unrivaled rate. We'll all be enthralled and very wealthy.
In summary, Steemit's valuation is coming back to earth
The hot air is disappearing from the Steemit bubble and it's current price is a fairer valuation.
The price might still have further to sink before a recovery. It might rocket. It may never recover. Anyone who can accurately predict prices is lying (or is very rich).
But personally, I think this is the quiet before the attention-storm. I suspect the price will recover. If you make valuable contributions now before the mainstream heavy-hitters arrive - then you'll be well rewarded.
Great Article! I agree with you that on the long run Steemit price will increase again and the current price level is an excellent opportunity to invest in some discounted Steem and power up.
Yeah, long-term this is a time to buy. Short-term this is a time to sell if you need the money (to pay off debts, start projects etc.)
What's telling is the fact the volume has been dropping so much over the past few weeks. During the speculative phase the volume according to Coin Market Cap was around $1.5 million+. Now it's usually around $200k per day.
I suspect those who need to sell are selling, and those looking to accumulate are accumulating.
A very good article. Could I ask why you feel that 1$ is no longer overpriced? Is it more than just a gut feeling? Is there a similar coin or concept out there that out there that one can compare it to?
It's undoubtedly extremely difficult to predict what the actual worth of STEEM will be in a few months. I completely agree that the price will recover, but I'm having a difficult time trying to predict when...
I can only say it's gut feeling. Furthermore it's hard to compare to other coins/social networks. It's superior to Bitcoin and the other altcoins because it's multidimensional (social network + cryptocurrency + blockchain information records combined).
One metric I watch is the total valuation per user. At time of writing Market Cap = $127 million with 75530 accounts (Sources: Coinmarketcap and Steemd ). That makes every user worth $1681.
Facebook's similar metric is $353 billion, with 1.6 billion members = ~$220 per member.
Steemit's valuation per user is about 8x higher than Facebook's.
However Facebook is a very mature social network with little room for growth. Whereas Steemit could grow 1000x and still only have a minor fraction of the world's population using it.
On the other hand Steemit could collapse and the momentum could grind to a halt.
Like I said - the only people who can accurately predict these things are lying or very very rich. My gut feeling however is that the Steem price will fall a bit further before recovering.
Gut feelings and intuition are good to go by, since they're usually based on your experience.
I really like the metric you chose, but to me it actually looks like STEEM is still overpriced - It seems a bit odd that STEEM users are "worth" that much more than facebook users. Granted, I think that there's a huge difference in the content quality between the sites, but that number still seems pretty high to me.
It seems like the two ways to change that number are either for STEEM to lose value, or for more members to join (which might cause the price to recover). I expect the immediate answer to be the former, but either way I'll be watching closely.
Yes, that's fair. What I expect is a lot of volatility. If the price falls too far I think I'll buy back in with what I've cashed out. If grows too fast I'll cash out some more. At the moment I don't really want to sell the Steem I'm powering down.
are you powering down right now?? seems like a bad idea at this price no? besides if everybody here with an account decides they dont believe in the recovery this boat sinks !! the best thing is to be more active, to post , curate to connect others into this dream of rewarded free speech !! Time to put all our hands to the pumps of this machine which floats to me in the right direction for a brighter future globally speaking.
Sounds like a good plan.
I think sometimes I get so wrapped up here in what I'm doing atSteemit, I forget about the underlying cryptocurrency at play here and don't realize the potential. I really do need to focus as much time on STEEM as I have some of the others.
Yeah - well it's great you're here, upvoting, commenting and finding it interesting. Your attention is valuable.
well ive got myself into a bit of Steem and I,m holding onto it !! ; - ) but we need to liquidate all these inactive accounts i believe as it will re inject a lot of lost capital that maybe we need to feel right now !!
Since I joined Steemit two and a half weeks ago, it's practically become my full-time job! I seriously spend more time here than anywhere else online, reading, upvoting, commenting, and posting. I've got a book to finish and a release date, and Steemit is just so wonderfully addictive, it's hard to stay away from it. I hope other people feel the same way, because these are the people who will stay and build the foundation of the Steemit community.
I'm both cashing out AND investing. I've set a rule for myself that if a post earns above a certain amount, I cash it out, and if it is below a certain amount, I invest it into SP. This way, I'm getting the benefit of some money I can really use (and Steemit becomes another egg in my freelance writing gig basket), and I also get to invest in a platform that I believe has excellent potential to take off and make a lot of money for the ones who believed in it and put money into it in the beginning. It's kind of like getting to invest in Microsoft during its initial offering. Pretty cool, I think.
looks like you scratched somebody big in the right direction !! ; - ) yes this can be the most exciting thing that ever happened to you, or the reverse, but let,s be positive and Steem on no matter what !!
I really enjoy your posts and comments, keep up the good work!
Hi! thanks for comenting my work. I came to check out yours and I am glad to find this good content.
I was invited by a friend to join and in the few hours I spend here I didnt find enough motivation to go deep into searching posts or finding more out about the project. Most of the articles I checked out seemed to me empty of content and more wanting to just take atention for nothing. I decided to write about my work and travels because I am waiting and preparing for that for years already and I will keep doing it as best as I can because I think that each of our acts define us as persons. Your article and discussions with others inspired me to make even a better job right in the moment when I thought nobody cares for content here. That is very good! Is good to know the beginning of things to understand the essence of them. See u around and thanks for creating the site!
I am looking forward to alternative web sites like steemit in lieu of google's you tube, which practices censorship.
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I purchased steempower yesterday but it doesn't show up in my wallet. I think now that is related to the crash you mentioned? How can I get in contact with someone from Technical support to get my PS added?