When the Steem price drops 63% in one month from $4.50 to $1.70, yes it feels like the drop on a roller coaster. Like a roller coaster drop, I have experienced feelings of fear and anxiety today. A lot of us are programmed to deny or ignore these thoughts and feelings. After years of doing that, I find today owning up to them helps me move through them, stay rational, and avoid the self-sabatoge that comes from making decisions in the middle of feelings of fear.
Yes today has been a challenging day after seeing the Steem price drop at https://coinmarketcap.com/currencies/steem/ and thinking all of the thoughts coming with it. I have had a few thoughts questioning whether going all in on Steem was foolish when that meant giving up a lot of earnings from selling new video courses. With watching the price drop, I regretted not powering down once in 2018 when the Steem price was $3, $6, $9, $6, $5, $4, $3, $2, and now $1.70 today. I have felt and faced the irrational fear of being out on the street unable to provide for my family despite being in a better position than ever today to earn.
The question I ask now is what can I learn out of this? How can what I have experienced today be useful to someone else? What opportunities does this create today? We see the answers in the rest of this post.
First and foremost, now is the very worst time possible for a panic cash out. I know because I did exactly that with Bitcoin when it plunged in 2014 from a high over $1,000 down to as low as $170. I started buying in at $600 and thinking it would go right back up. My plan was to quickly double my money.
After months of failed trading as Bitcoin declined down to $170, I finally folded under the pressure and sold it all which at the time was about 40 Bitcoin for about $200 each. Calculate how much that 40 BTC would be worth had I held it until today instead of selling it all for $200.
If you're lazy like me, I will do it for you. $306640 at the moment despite the market for Bitcoin being down about 66% since the high at $20,000. Let me state that another way. I sold what today would be worth about $300,000 for $8,000 three years ago and managed to lose $5,000+ more before that trading because I got in with no exit plan and I folded as soon as the market tanked.
I still believe the Steem price will again reach close $10 this year along with $20 to $50 within a year or two because we are making the only blockchain that in my opinion has the chance to replace Bitcoin as #1.
What I hope to share in this post is how I work through the waves of fear that come with a price drop and stick with Steem through the drops. I am actually excited the market is going down because I hope to see many of the cryptocurrencies that are just faking and scamming die while those like Steem making a real difference in the world thrive and come out way farther ahead in the next pumps.
Thus, I will be continuing to hold my Steem power and staying all in on Steem because ...
When the SBD and Steem prices spiked, everyone that had been contributing daily on Steem was in the perfect position to cash out a lot. Selling most of my author rewards in 2018 has allowed me to make the entire downpayment on a house for which I am extremely grateful! That was possible because for months when the price was lower I just kept posting every day regardless of the earnings. You will notice I continue posting regardless of how high or low the price is.
The trick is to be in position BEFORE the pumps happen. A big drop is the BEST TIME to get in position for the next pump when we combine that with patience. With Steem having been as high as $9, we can be sure $1.70 is a great price to buy more and have confidence the price will again reach $9 in a month, three months, six months, a year, or whenever it is time. When we invest long term, we realize the largest gains from compounding where earnings produce more earnings.
Albert Einstein - Compound interest. Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.
Our feelings often tell us the exact opposite of what we need to hear investing. We get excited and buy high when everyone else is buying because we think it will go up forever. Then when the price drops we sell out of fear of the price going low. Most of us think we are smarter than everyone else and we tend to pay the price when we review the data as I learned the hard way. When we go against what the crowd is doing, we feel insane buying when everyone is selling. We then feel insane again selling when the price is high and it seems crazy to sell out of missing more profits.
I bought about $50,000 worth of Steem at around $1 when so many people said Steem was going no where and it would always stay at a $1. When the price spiked for SBD first and then Steem I sold most of my author rewards for months. We also worked together with our budget proposal system to fund $50,000+ in projects designed to grow Steem before the price tanked.
Thus, this price drop is the opportunity many of us have been looking for to power up and earn big.
I have thought a lot about powering down today. I have had negotiations about how much to power down and questioned why I did not power down before. I tried a power down once last year after the price went from $1 to $1.82 just to say I had done it and to pay Steem related bills like witness hosting for three months. I then regretted that power down for months as the price went up.
The trick with compounding is to take advantage of the earnings helping us make more. This means when we get interest, that interest then earns more interest. Earning 1% a day might not sound like much but earning 1% on top of 1% adds up ridiculously fast. In just a month, earning 1% a day on $1,000 yields over $300 in profit.
With Steem, our earnings compound like crazy because the more we have, the more we can upvote. The more we can upvote, the more we can earn. The more we earn, the more we can upvote. The more we upvote, the more we can earn.
Powering down causes a huge disruption to this positive feedback loop while avoiding a power down allows our earnings to get flat out ridiculous. When we want the value of our Steem to increase, ultimately it comes down to not powering down.
Despite crazy irrational mental pressure today to start powering down right at the worst time possible, I am still not hitting that power down button. At a minimum I will wait until I can sell at $10+ and realize capital gains on my investments allowing for a flat 15% tax instead of nearly 40%. This was my plan buying in and today was a test of faith whether I would stick with it. It seems easy when I remember my mistake before with Bitcoin. Our mistakes are our chance to learn to do it better!
Unlike Bitcoin and many other cryptocurrencies which offer little opportunity to earn just by holding, on Steem we have a very powerful way to earn while holding! The ideal solution to earn some without powering down is to sell SBD earned from author rewards and/or voting bot returns. This allows us to constantly increase our principle AND get a payout.
When the Steem price spikes, our payouts get crazy and make up for all the down times. When the price drops, we do not actually lose anything because we are not selling. We just get smaller payouts for a while which we can even power up for a chance at massive rewards later. For example, when the Steem price was $5 and fell to $2, one could say we lost $3. However, when we do not sell at $2, we really have lost nothing. In fact, when we hold until the price goes back up to $10 and then sell, we in fact made $5 despite the drop.
This gives us two basic options to cash out. For those of us active as curators and authors, we use our voting power every day and earn both by self voting and from mutual votes with others where those we vote up tend to vote us back. We then can cash out the SBD earned each week while enjoying larger voting power from the curation rewards, author rewards, and interest. We constantly increase our stake without touching the principle. When we can afford to put it all back in, we set ourselves up for the most success as I did for the first 6 months on Steem where I powered up nearly all of the SBD author rewards I received turning an initial deposit of about 30,000 Steem now into 112,000 Steem Power 10 months later.
For those of us not interested in upvoting and posting daily, we can simply delegate our stake to a voting bot to get regular payouts. My account is a voting bot and makes automatic daily payments to delegators with a minimum of just 10 Steem power while also funding growth projects as explained at https://steemit.com/steemit/@jerrybanfield/10-ways-to-fund-a-steem-growth-project. I cash out alongside hundreds of other delegators through my daily delegator payout which is combined with my author SBD earnings. I then hold the rest which allows me to keep increasing my stake while also satisfying my desire for a payout each week. When prices are low, I get a smaller payout. When the prices are high, the payouts are ridiculous!
While my bot pays about 1 Steem a day for every 1,000 to 2,000 Steem delegated depending on the price, other bots actually pay out more while not providing any funding to projects that help increase the value of Steem. The Steem Bot Tracker at https://steembottracker.com/ can help those of us wanting a full payout all to ourselves locate a bot that will give us our highest payout.
Tonight for the first time in weeks I have seen bid bots at https://steembottracker.com/ paying out a profit! As Steem users see the price drop and panic sell everything, less of us can afford to throw money at a bid bot to promote our post by sending SBD or Steem with our post as the memo. This leaves those that still have some Steem and SBD able to turn a profit easily out of bots which helps us to promote our posts, earn more SBD, increase followers, and indefinitely increase our voting power!
Our feelings of fear when the price drops are just like the fear we experience going down the big hill on a roller coaster. When we help each other stick with it and stay in during the down times instead of jumping out of the ride to our death, we all come out way ahead when the next big buying season begins and we start going up the big hill before the next drop. If we are lucky, we may even actually enjoy the ride together!
I hope this post has been helpful today for reacting to the massive Steem and cryptocurrency price drop which has been my biggest challenge today. Thank you for reading this post with me and I appreciate you making this journey with us today on Steem!
Love,
Jerry Banfield
