Seeking Clarity
Normally I'd be updating with a bit of commentary about price charts and such. But seeing how I've already explained where my stop loss is, I'd rather turn my attention to something that popped up in my feed not long ago.
I understand that Mr. Kendal has a large following - I'm doing so myself to see what the fuss is all about - and that he's called successful price targets for the Steem token before. But this isn't some character assassination piece. Its more about the reaction to the unbridled optimism that I see in his update.
Feeling Gravity
Everyone has had the experience of that near-weightless feeling when you jump from a high ledge, or dive off from the edge of a pool into the water. Its euphoric, you don't want it to end because the novelty of not supporting your own mass is half of the fun. But inevitably gravity takes hold, and you descend from the peak of your arc towards freedom.
Its very similar to the hype cycle in Over-The-Counter (OTC) stocks, where promises of great gains and untapped riches await the bold investor that has the courage to plunk down their earnings and score a piece of the pie. But like all stories that have enticing destinations, there are a few bumps in the road along the way.
History Repeats
When I see unbridled hubris surrounding something, it makes me instantly suspicious as an investor. Like the chart above, which depicts the dot-com bubble rally on the NASDAQ, I can't help but think of other "promising innovations" that haven't outlived their own hype machine.
The jury is still out on the Steemit ecosystem.
While I see the value in the platform when it comes to collaboration, I don't yet see how the Steem token would gain value simply by having more users. Indeed, there is no issuance cap that I'm aware of - it seems to be inherently inflationary (more units created as needed) which would deter it being used as a store of value.
So where is the potential?
Even "Steem Power" gets divided every 3.3 years, but even using a crude divisor doesn't get away from the fact that it will keep inflating (and diluting its users), for as long as the system is in operation.
Reality Strikes
I don't want to say that it all ends in tears.
I'm cautioning about irrational exuberance. There are plenty of good things about the Steemit ecosystem, but riding the hype-train to tear-town isn't the way to go about it. Be rational and pragmatic. Any investment into this system should be made with the full knowledge that there is an inherent risk.
Sometimes, plans go awry -- look at my recent technical analysis post -- I knew that any sustained activity under a given price level would spell trouble, and that is where my "get me out" sell-stop is. That's just how you handle risk as an investor.
So when you see a post by someone high-level and well-meaning -- remember to take a step back and analyze it outside of the emotional content of the message. As Mr. Kendal has suggested, institutional interest in the Steemit token would indeed create a large demand bias in the market.
What I question is why they'd bother getting on board to begin with.
Rounding It Out
Apologies to Mr. Kendal, but there are a lot of other opportunities that aren't wedded to a token that is inherently infinitely inflationary (even with adjusting 'reverse splits'). Other tokens such as Bitcoin, Litecoin, Ripple, Ethereum, Monero, Dash and many more would be a way to diversify and get yield exposure.
Unless Mr. Kendal has some inside information, (which wouldn't be prudent to broadcast before the fact), I personally don't see how any institution would invest when there are many other places to put their money.
Much like the hype I've seen in "penny stocks" on the OTC market before a 10-Q filing, it reminds me of similar patterns that occur before insiders dump their holdings on to hopeful new investors.
Like legendary fund manager Kyle Bass says - "It's a six-lane highway in, and a goat trail out..."
Don't get caught on the wrong side just because you let emotions guide you instead of rational decision making.
Stay cool, stay calm, and all the best to you!