Even though Steem’s future seemed very bright once it launched, shortly after the price started a steady decline. The question is, if Steemit is such a great platform how come the price is continuously falling?
One explanation that comes to mine is that price changes reflect the supply and demand for a specific currency. When price goes up – there are more buyers than sellers, when it goes down – there are more sellers then buyers. So before Steem was live there were no sellers at all since the platform was in Beta. People could only buy Steem but not cash out on it. So people “bought into the dream of Steem”, investing money and time to create awesome content. These people were getting paid for their content but they couldn’t cash out on the money.
Once Steem became fully operational there was a rush of Steem users to cash out their Steem Dollars into Steem, and then cash out Steem into Bitcoin or their local currency. That’s why in my opinion the price has been falling ever since the launch. People don’t have any actual use for Steem since it’s not accepted anywhere, so once they get some Steem in their hands they quickly trade it. Combine that with the fact that there’s no real incentive to invest in Steem other than speculation and you get a larger amount of sellers that drive the price down.
One of the main reasons that Steem didn’t fully collapse after launch in my opinion is due to the fact that not all of your Steem can be traded at once. Steem power has a limitation of 104 weeks until you can cash it all out, so this stopped the steep decent of the price and made it a bit more manageable.
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