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.
You can join the Steemit community for free by signing up for an account but you can also read some of the best articles on the net without an account. Either way you will be contributing to Steemit and helping take this great platform to the next level.
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.
I've seen a few coins get pumped recently with massive rises, e.g. 15000%! Very few people would get to profit from it. I hope Steem can rise sustainably
I think that the SP and SBD instruments both together have served to stabilise Steem - look at the price for 3 months now, rarely more than about 6% change per day. I think this is because these extra instruments moderate the buy/sell ratios, when it's good to sell one, it's good to buy another, and so the net result is change is slower. I think that we are still waiting for 0.09 USD, but after that there will be steady upward movement.
I've been buying Steem for SBD whilst the price is down. I think the 'business' model of Steemit is good. It should have a future and Steem will go up as people get into it.
I think the idea of using a peer review forum as a criteria for currency issuance is absolute genius. The world will catch up with us.
It's the best thing since Bitcoin.
STEEM is very cheap now. Good for those who want to power up
It could go down more though.
I wouldn't like to encourage speculation in STEEM just faith in the platform and more great articles. I am not investing much in STEEM just investing my time in writing and curating, and the long term value of the platform. I hope this price drop doesn't discourage valuable people from the platform. Let the sharks leave but lets keep the Cream.
even if steem will go down 100 times, I will still earn here more than on facebook or reddit :)
Definately. There is also a great community of interesting people here.
Upvoted. Great post. I hope you're right!
Thanks for the upvote.
Great post! Steemit has a bright future.
Thanks for the resteem.
I'm keeping faith in Steem, also. I have a feeling the price of Steem will look a lot different in the years ahead!
This post has been ranked within the top 80 most undervalued posts in the first half of Feb 21. We estimate that this post is undervalued by $2.88 as compared to a scenario in which every voter had an equal say.
See the full rankings and details in The Daily Tribune: Feb 21 - Part I. You can also read about some of our methodology, data analysis and technical details in our initial post.
If you are the author and would prefer not to receive these comments, simply reply "Stop" to this comment.
I hope to get a few :)
I haven't got the bait figured out yet but I am working on my recipe.
Great article eroche, I think the changing investors out from some of the sharks, also is a good long term thing for steemit. Its surprising how much fluctuation all the the crypto coins have, considering its as you say, largely speculation and these pump and dump runs. Steemit is improving very fast though, and while it takes time to attract more investors and authors, its goo for those of us on the platform to enjoy and benefit some. I know I have.
Thanks @unipsycho.
It's also a great time to develop blogging skills before the rush starts. There are some great and encouraging people here to learn from, learn by doing. Getting out there and trying it out.