The Price Is Tanking, When Will It Stop?
When people see the price of anything drop, a certain percentage of them start to get worried. This is a natural phenomenon and quite common in all financial markets.
Steem and Steem dollars appear to be in a free-fall (exhibit A and exhibit B)
Exhibit A: 3-Month Chart of Steem
Exhibit B: 3-Month Chart of Steem Dollars
Down 75% and 80% In Less Than 3 Months... Ohhh No!
The drop in price is rather stunning... Steem has dropped from $8 down to $2 (that's a 75% butt-kicking). But the price of SBD's have dropped even more from $12.50 to below $2.50 (that's a cool 80% haircut in less that 3 months).
Is it time to panic???
(source)
No Panic Necessary, This Is A Great Thing!
This is a great thing (unless you are a whale) and I will tell you why. The answer lies in how the system works, and how the Steem Power (SP) gets paid. As you know, or should by now, SP is the way to keep track of how your "power". Simply put, the more SP you have, the greater your influence and financial rewards.
So how does steem price crashing help us to get more power???
Lower Price = More SP, Who Doesn't Want That?
Here's 3 simple calculations to show how the system works:
With steem at $8 (The HIGH)
On a $1.00 upvote
Your SBD payout would be $1.00 x 75% x 50% or $0.375 sbd
Your SP payout would be $1.00 x 75% x 50% = $0.375/(steem price of $8) or $0.047 SP
With steem at $2 (NOW)
On a $1.00 upvote
Your SBD payout would be $1.00 x 75% x 50% or $0.375 sbd
Your SP payout would be $1.00 x 75% x 50% = $0.375/(steem price of $2) or $0.188 SP
With steem at $0.50 (The GOAL)
On a $1.00 upvote
Your SBD payout would be $1.00 x 75% x 50% or $0.375 sbd
Your SP payout would be $1.00 x 75% x 50% = $0.375/(steem price of $0.50) or $0.75 SP
So what do you want from each $1 of upvote?
Do you want the $0.047 SP on the highs, the current $0.188 SP now, or the future $0.75 SP if steem dropped to $0.50? I personally would rather have 15x more SP for every post, so I'm rather happy to see the price go down ;)
15x More SP For Every Upvote, That's Not Only Good Its Great!
Next time you hear someone complaining about the price of steem dropping, just ask them this one question:
Are You A Whale?
Only whales want the price of steem to go higher because they already own enough. Do you really own enough? If not, then quit your bitching and get excited because the reset is going to be good for the people that understand this!
I'm excited to see it come down, and you should be too! ;)
Worried About Steem Price Dropping? - Don't Be, Its A Great Thing!
I would have thought it balanced out. For example (hope this makes sense), when Steem is up the value of votes is also up, so a vote that would be worth $1 now, might have been worth $2. Effectively that means although the conversion rate works out higher per dollar at the low end, you would have been getting it on $2 not one at the higher end, which would still have yielded exactly the same value. However, higher voting value gives more on the SBD conversion side, which can be changed to SP at a higher rate giving a bigger boost to your SP if you choose to take that route.
I actually worry about 2 other things 😂
The first one is very simple, my very low rewards 😜
The second one is about the math in your post. I thought the vote values in USD are much lower now then they were back then with the higher Steem and SBD prices.
I would say the following example easily shows that it doesn't work as you show in your post. You actually say that if all of us gets higher rewards in Steem, the total Steem reward pool had increased. But the Steem reward pool is not bad on the Steem price, but on the amount of Steem already in the system.
@crypto-econom1st you're "very low rewards" has nothing to do with the amount of SP you get per dollar of upvote. That is another issue entirely and not relevant to this point. Whatever your rewards are, the simple fact is you would get more SP with steem price lower. Its how the math works.
On your second point that is true... I'm comparing a $1 upvote to a $1 upvote... I'm not trying to get into the mechanics of how that upvote is achieved. The simple fact is that you get more SP the lower the price of steem is... And you are correct that it is harder to get an upvote if the value of steem drops. 2 different things though.
About my own rewards that was indeed a joke. Tried to make that clear with the 😜
I still think your post is a bit misleading. Because it now looks like if I receive an upvote from person xyz, I will get rewarded a higher amount of SP compared to before the Steem price dropped. But if poison Xyz still has the same amount of SP, I will also receive the same reward in SP. In $ value the current reward shows with a lower amount.
I'm sorry, I usually catch sarcasm! My stupidness! :)
And I understand your second point, I think it will be harder to get the same dollar upvote, but in my mind its two different things... Remember that people put money in and take money out all the time and if the price goes lower then they buy more sp but keep the vote the same too. That's why it gets confusing to try to dissect it to the average user. My main point is to realize that your earnings will translate into more SP as the price of steem drops.
No problem for missing my stupid joke. Maybe I should make a bit less of them. Cause sometimes I seem to be the only one laughing.
In general Steemit is quite difficult to understand and do all the math calculations correctly.
Thanks for the very nice conversation so far!
haha.. you're funny @crypto-econom1st... My jokes are super stupid sometimes, so I I get the point! :P
I agree it is a nice conversation and btw, we went even lower today! ;)
Agree completely. I have been curating and blogging daily to ensure that my steempower builds up. Steempower is more important in the short and medium term, the actual value only matters of you are selling. Followed!
Great @crypticat! That is exactly the way to think about it... just do your thing and let the value build up over the longer run! :) Followed back ;)
little guys like me may buy more SP while it is low. That is a very good thing.
I agree with you completely! Its a very very good thing! the lower the better, you watch! ;)
Lol. Love the post Dave. Especially the end. As always you've got my vote. :)
i'm glad you liked @mudcat36, somehow I knew you would be on the same page ;)
ps.. you might even decide to buy a little if we get cheap enough! ;)
Thanks for the encouragement here! (And for doing all that math haha!) Do you think it's going to keep falling?
You're welcome, I tried to simplify it!!! :) ... And I don't know, it has bee dropping quite a bit. Last summer it was down around $0.50 so I hope it does go back down there (it really would be awesome). But I also am not holding my breath. I realize that there will be people that step in at every level... The guys that did it at $2.50 got hit today as it broke down to $2.
I think it will depend more of the external environment than anything... There was a lot of "hot" money that chased all the cryptocurrencies so if that money dries up or gets scared, then yes it could definitely keep falling. I'm hoping it does happen because if it did then I will invest more than just my time.
I love the platform, but the price was such that only a few at the top had all the control. A drop will even that out (especially if it is prolonged). Because this is sorta like the wild west, then anything can happen. But my point to the article is to realize that people in our situation should realize we get a higher % of power if the price goes down. Eventually that adds up! ;)
Did I explain it satisfactorily? Or do you have more questions? This is a subject I could talk about all day! :P
Great post! When do you forecast it to drop to .50?
I'm hoping by the summer... but if it was to happen then I think it would be more tied to a panic in the crypto-space in general. IE... if a panic hits bitcoin or ETH or the bigger ones, then the steem would suffer as a result of people cashing out to protect themselves.
Last summer it was down below $0.50, so there is no reason to believe it is not possible in a panic. In fact, I'm hoping like hell it does happen!
Great analysis! I came to the same conclusion. I don't have the funds to buy SP, but I can cash in on the low price of Steem. Now if we could get Steem to $0.10 and SBD to $20, then I could level like crazy!
hahaha... I agree... and we could do even better if steem went to $0.01 and SBD went to $100.. lol
Glad you understand the math Blondie! :P
I actually think that could happen. Not that extreme. But if the prices drop a bit further and then someone will do a pump with the SBD price. Such market manipulation could have a nice outcome for up powering SBD 😬
exactly on that point too... My target on that is 3 to 1... if I can swap sbd for steem at 3 to 1 I will...
see we agree ;)
That would be lovely. Although I would feel bad for the people who were selling to me at that price... then I would enjoy getting to power it up.
well you are a sweet guy after all blondie... So I figured that ;)
Really, I like your analysis of the steem currency and split the voting rate.
I think the low price is our chance to get more Steem Power.
Do you think that the SBD currency will fall further?
all the best for you good luck my dear friend @davemccoy
I do, but not as much as steem... in fact I think it will fluctuate between $1.5 and $4 for awhile... The good think is I think this will lead to a great conversion ratio of sbd into steem. That will get fun
I guess unless one is cashing out, or one is needing the money now, one shouldn't worry too much about the price fluctuation. It is natural for markets to go up and down. As long as the 'company' is sound, prices will go up again when the market is positive. At the moment, as you pointed out, it is a good time to accumulate SP, or load up / buy more Steem - if you are so inclined.
very good points @quotes-haven! you are exactly right! :) We are on the same page!
Yeah leave the FUD out as this is the best time for you to start buying Steem and SBD.
If you don't need the money then keep that SBD or power it up.
The time is now for us to become minnows and the next dolphins.
As always, we are on the same page Mav! ;)
That's what I'm hoping for!
I was quite sad that prices are dropping. But you opened me to a different and a very interesting way of thinking. Getting more SP is way useful than getting liquid SBD. But there is another thing to consider. With high SBD price one upvote is worth more than one upvote now.
I'm glad I gave you something to think about @reazuliqbal... It is something for you to realize, especially if we get sub $1... that will be awesome...
As to you last point, I'm not sure I understand.. can you rephrase it?
My last point was - high SBD price translates to higher rewards. So, if a upvote gives you $1 now (at low SBD price) that same user's upvote will give you more $1 when SBD price is higher.
Because of 50/50 split of reward, you get more SBD, if STEEM price is lower more SP, and you can also buy more STEEM with the newly earned SBD. This was the case in last part of last year and early part of January 2018.
gotcha... agreed! thanks for clarifying and I agree completely!
You lost me at math, but up until then I was right with you.
hahaha... that's kinda the gist...
do you want me to explain it further? I would be happy to show you how to do that calculation!
No, thank you though. I failed grade nine math twice. It would have been thrice, had I not been expelled in what should have been grade eleven. I trust your judgment, even though the price of Steem doesn't really matter to me. If I was going to sell it, I suppose it would be different, but luckily I'm not in the position to need my $9 right away. haha
Thanks for all the work you do here.
hahaha... very funny :) ... I love this comment! very very funny!
@davemccoy, that's an eye opener. If you are a Steemian, looking at the long run is necessary as leveling up the SP at lower price is definitely a good catch.
Exactly @liewsc! It is exactly the point... If we look at this long term, then we want to buy low and build power when its cheap! Only whales should be unhappy!
JoyShould we be converting to steem and powering up? Great post. Charts and everything. Should minnows purchase steem now to get a boost or wait. Your analysis is great. I am excited. Thanks @davemccoy
Hey @sweetjoy, always nice to see you! Glad you liked the chart and simple analysis... I am waiting on power up my sbds until I get 3x the steem for each sbd (still not even close today)...
But as to the second point.. this is a good time to be scaling into steem... I have an objective of $0.50 myself, but of course there are no guarantees that we get that low.. Right now it is even cheaper... So what ever you do, just remember that all markets move more than you would think possible. I always keep that in my mind when I make investment decisions.
Wine anyone? You are doing so good Dave. You should celebrate. ;). Joy
Now everything became clear. But when you see how the fee for your posts is decreasing, and he is already very small, it becomes very insulting))) Although, I still perceive this as a game and entertainment.
Thanks for subscribing!
Hey @marymilk23.. I think this is the first time we've talked, I love your name... :)
And to a degree you are right, but you also should realize that the whales have to keep people from being disgruntled too... So in a sense, the drop in price will force them to increase their sponsorships to communities that give support. I think when the price was high, most of them got greedy... Now that they price is dropping, they will have no choice.
I have many posts that get 50 upvotes and less that $1... they will have to do something to fix that... The point is that with the price lower, you will get more SP... Its like rewinding the clock and giving us all a chance to get involved at an earliers stage.
ps.. I agree with you completely. This is more about the game and entertainment value than the money. That's a great attitude! :)
What is your name @davemccoy ? Suddenly I also like the name)))
Russian social network "Voice" of such games of whales in superprofits led to the collapse. All good authors and photographers left here. I hope Stimits is waiting for a good future. Here it is quite interesting, although not everything is clear.
Hey @marymik23 :) ... glad to hear from you again in such a short time! My name is Dave McCoy and I am glad that you like the name now ;)
I agree the great times led to some serious abuses and its sad to hear that all the good authors and photographer left. Are you referring to Russian groups only or everywhere?
I do find this place interesting too, in fact I've met some awesome people and made some good friends all over the world. The money at this point is irrelevant because it is so small, but I think one day it might reverse. Especially if they take it low enough and wipe out some of those whales in the process. (I'm assuming you aren't a whale of course) ;)
Let's stay in touch @marymik23 :)
Nice to meet Dave :)
I wrote about the Russian version of the Steemit, which is called the Golos.
Am I a whale? ))) I will tell you a secret, I do not like water, I land! ;)
Nice to see the math and logic behind it all. Thanks for the reassurance! I will definitely be buying more if it drops down that much!
Me too... That's why I'm prepping people now... it might seem crazy to some, but if you are prepared then it can be a very wise purchase!
Woww..
Now I understood how all this runs.. Am so excited cause I really learnt a lot from your post... I absolutely prefer 15x of my SP rising too... That will be a great benefit to us who ain't Whales and Sharks.. Lol
Thanks for a wonderful and informative post... You are the best
exactly @juliangold! You got it! I'm glad I could help you understand this because it is a very very important part of what is coming in my opinion! :)
Thanks for this analysis Dave! You know me and numbers haha, so I appreciate the examples to show me what you were talking about! This is so good to know!!
And just wait until @beeyou sees that you said "bitching" in public haha
heck, let’s show the ladies the spicy side of @davemccoy 😉.Imagine my gasp @lynncoyle1. Our sweet dear @davemccoy using the ‘B’ word in public. I do always tell him he is too too nice. Must have listened and decided,
I'm a bad boy now @beeyou... Didn't you know that??? No more mister nice guy... The bad boys get all the attention from the ladies ;)
Fancy smancy. Prove it.
lol... ok... i will...
Here is my tat on my arm:
Ehh, not too impressed. I prefer ilovepoorpeople's cute bird pecs. Those were mighty impressive.
hahaha... yes I must admit... he did have some pipes! :P
ok, now I'm intrigued :)
First pictures of Fabio, and now this haha
hahaha @davemccoy...that is hilarious!!
And only the stupid girls paid attention to the bad boys :)
hey I knew I liked you @lynncoyle1... you are good for my ego and I appreciate that you stick up for me (psst I'm really not a bad boy and that isn't really my tattoo). ;)
And that's funny you said that, I used to say that to myself all the time. If they wanted the muscley bad boy types with big muscles and long flowing hair, then they were just stupid. Maybe I was smarter than I thought back in the day, or maybe its just something that everyone says when they can't get the girls that they wanted... I choose the former thanks to you and your ego boost! :D
hahaha @beeyou...I knew it!!
Btw, I hate numbers too. I’ll just take our financial advisor’s word that this is a good thing.
it is... I promise.. btw, if you and the boys want to start deploying some of that stack, now is a good time to start fading this dip and rolling up the gains...
No idea what you just said but I think I get the gist of it. Haven’t heard this financial talks side of you before. I like!
Did you see the market today? It got walloped... I told you! ;) ... If it comes down hard then I will be in a position to buy lots of cheap steem too... That will be very cool for all of us! :D
You got a 16.67% upvote from @steembidbot courtesy of @davemccoy!
:P ... Glad you like.. it goes with my new bad boy image too! Take no prisoners!!!
Its time to rock and roll!
This is getting funnier by the second!! Take no prisoners lol
bad boys have to be bad... taking prisoners is for wimps
That's exactly what I'm doing!!
hahaha... I know... I'm in trouble damnit :P
But you got to admit it's kind of scary. After chatting with folks on discord I kind of felt like steem is slowing down and I joined the party late :(
Rydhi
I don't think so Rydhi... I think that we came in when it was super hot... but it is still very strong in terms of a platform... It just seemed hotter than it was because the prices shot up to high... now you will see that we get much much more and will understand how the others got so big
Plus the next time it goes up, it will go even higher... Hang in there.. I do follow these things very closely and I'm telling you it is a good thing! ;)
You hit it right on the head. Part of the reason why I didn't consider power up immediately was because Steem price was higher than I would like it to be.
If it will drop below $2 USD for an extended time, I will most definitely drop some money to power up.
When the price is high, I think that's when focus switches over to more authoring, etc.
I agree completely with your analysis @enforcer48! :)
Keep an eye on it and remember that this is a marathon not a sprint!
Hey Dave. I finally get a glimpse of your abilities with financial insights and it is fantastic. Your examples are so easy to digest. I guess it’s time for me to load up the wallet and get ready to pounce at ~$0.50.
I am not sure if you have come across a post that revealed the truth about the actual author/curation rewards. The average author rewards are closer to 84%, not 75% as we understand it from the white paper. There are cases where it is a little higher or lower, but if you look at some of your past post payout, you will see what I mean.
Below was one of your last paid post. As you can see, your author payout was ~88%. One of BeeYOU post received 94% author reward. That’s more great news for authors to top off the opportunistic STEEM price drop.
Hey @mellofello I am just now catching up to this one... But we discussed on discord today. Basically when you see that you get more than 75% it means you were upvoted by people in the first 30 minutes.
Hey @mellofello I am just now catching up to this one... But we discussed on discord today. Basically if you are better at getting votes early then you will have a higher payout.