This is just for a little bit of thought and perhaps some discussion and should be taken with a grain of salt.
When it comes to crypto projects most of them are vaporware so as important as everyone sees price of token, how connected is it to the actual project itself? Sentiment drives markets on a larger scale but with so many coins that are continually getting pumped and dumped, is it sentiment driven at all? For the most part, does anyone buying and selling actually care about the projects themselves?
What I am wondering is that considering Steem already has a working community and a growing number of usable apps in comparison to at least most other projects, it has slid a long way down the rankings to currently sit in 47th position. This doesn't seem to be based on anything solid but, I am not a trader myself. What I am wondering though is if the slide from 7.30 to 30 cents is part of the plan in some way.
Considering the sheer volume of what can only really be called shitcoins out there with nothing more than speculative value, at some point those holding the bags are going to have to let them go and get into projects that have some kind of future. What better way to buy into Steem than let it fall?
Steem typically is slow to track market movements so it means that it could be possible that during the next bull run surge, traders are looking to follow the pumps through their coins and then sell across into real projects with use case. At some point, the music of caseless coins is going to stop and some people are going to find themselves without a chair.
There is also the reasoning that Steem suffers poor distribution for a token designed to distribute an inflation pool, which means that with low price there is a chance that more people are able to invest into a project and get stake but, they also don't want to take a large hit if they bought into other projects much higher.
What I do think though is that trying to predict crypto markets based on price movement as if it is a tradition exchange with long history and real world application is not going to be accurate at this point. Comparing it to the dot com era bubble is more accurate but even then, this will be different again. There was a mass of vaporwear and 'good idea' investments in the late 90s that amounted to nothing but made some people very wealthy and a few of the projects pulled through to actually become something substantial.
It will likely be the same here except that pretty much anyone can throw a coin into the mix, hype it up and get some money in and, there are plenty of people who have bought into bitcoin or eth an have an excess to invest that they didn't need to do much for. When the banks and investment firms come into the market, are they going to behave in the same way as an original BTC or ETH investor or, are they going to be more traditional in their approach and back projects that have a good chance of uptake considering they still have some duty to their customers?
How many projects are out there which already have use case and track record behind them and if the estimates are correct, can absorb 3 - 5 trillion in funds with projects that have a chance of one day becoming somewhat stable? There aren't that many are there? If you consider that EOS was worth something like 15 billion before it went live, we can't really say that it was based on anything concrete.
In my highly uneducated opinion, price of a token has close to zero correlation with value of a project but at some point, there is going to be a coming together of price and true value. Steem is going to have a rather unique position in some ways also as there is going to be so many factors that effect investment as there are so many possibilities it can hold. During the dot com times there were companies getting invested into like Amazon and Priceline but on Steem, both of those startups can exist simultaneously on the blockchain. Does that make investing into Steem easier or harder?
In my view, it should make it an easier choice as rather than being a narrowly focused investment vehicle, investing into Steem would spread potential into all projects and risk across all projects. It would only take a few successful companies to utilize Steem to make the Steem project a success but, the one chain can literally hold thousands of investment targets simultaneously.
Again, this post is more for my own thoughts and visualization and perhaps to encourage some feedback from the community but I do think that there are far fewer intereesting projects out their than the amount of money that is potentially going to flood in can support. Does this mean that a proven use case and an engaged community will be an attractor of investment as at least there is something of substance? Time will tell but, when it comes to investing, vaporware is generally not what people aim to buy into on purpose.
While so many use price as an indicator of success, I don't think that the market is mature enough at this point to put that much faith on it. Perhaps one day, when there are robust chains with long histories and real-world applications, products, services and communities running along them but, we aren't there yet.
Taraz
[ a Steem original ]
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