One year ago I stumbled upon a fairly new blockchain project. It was called Steemit and it was going to change the world.

I began reading everything I could about it. A decentralized social media they said. I liked the sound of that.

There was just one problem: Steemit had some confusing economics. There was something about three coins I couldn't understand. You see, I'm not a math, a science, or a tech. Rather I'm an art and a history. These complicated blockchain gizmos confuse me.

I scratched my head and with my limited brain cells, the best I could come up with was this: There was Steem, which was an onboarding currency. Then there was Steem Power which was a voting rights thing. Lastly, there was Steem Dollars, which was a currency pegged to $1 USD used for payouts.

Thinking I had the most of it figured out I opened an account.

Enter Irrational Exuberance

After a while, strange things started to happen with these Steem Dollars. Bitcoin was amidst a civil war and thus logically rose in value, and Ethereum continued its rocket ride into hyperspace. Every other coin followed - including the SBD.

The coin that was supposed to be fixed (by I presume some kind of print/burn mechanism) to the USD was rising far above the USD.

My humble little wallet started to look a lot less humble. "Look at me," I said to myself. "Mr with the big Steem Power." I must admit, I liked it.

And the SBD kept rising.

My brain cells began to hurt again. Why wasn't the USD peg working? There was a lot of discussion on the topic at the time. Most of the serious discussion was happening by people who were a math, a science, and/or a tech. I couldn't understand them. The best I could gather was: the peg was broken. Something about it not being able to keep up or some such. However, everyone was making the monies so nobody wanted to fix it.

I don't begrudge them. Only a complete asshole would look a gift horse in the mouth.

I remember looking at the price one day and it was $14. The currency that was designed to be worth $1 was worth $14. What kind of nincompoop would buy at $14? They must be out of their mind. What are they doing with it? Powering up? Are they crazy?

It kept rising and I resigned myself to the fact that maybe I was the nincompoop and they were the smart ones.

Enter Reality

What we now know about these crypto coins is their price fluctuations happen in unison (for the most part). When the market goes up, they all go up, and when it goes down, they all go down.

The SBD is no different. When the market began to correct earlier this year, the inflated SBD came tumbling down along with everything else. At the time of writing, it sits at $1.49, a long way away from its high, but tantalizingly close to the $1 it's supposed to be at under normal conditions.

One could say, when the price surged over the $1 peg, irrational exuberance caused the rise and the peg to break.

Couldn't one also say if the price was to fall to $1 again, that would indicate irrational exuberance has left the market and thus prices have returned to normal again?

Can the SBD Signal When the Crypto Markets Have Bottomed Out?

This is a thought I have been having for a while in the shower of a morning. Remember, I'm not a math, science, or a tech. I'm fairly sure I'm wrong. However, perhaps a person smarter than me out their in blockchain land could enlighten me. 

My hypothesis is based on the answers (of which I don't know) to these three questions:

1) In the event prices continue to fall and the SBD returns to $1, as long as another massive bull run doesn't occur immediately after, would the peg kick in again and start working normally as it used to?

2) If the peg did start to work correctly again, and knowing the entire crypto market moves in unison, wouldn't that indicate the market has returned to normal and thus reached a bottom? Couldn't we then be confident the bear market is over?

3)  Considering the broken peg was an accurate indicator the market was going crazy, what would it mean if the SBD dropped below $1? If the SBD fell below $1, couldn't we say the crypto market is irrationally oversold? Wouldn't that mean a degenerate gambler, sorry I mean savvy tech investor, could place a bet, sorry I mean invest in cryptocurrency confident in the knowledge the odds are on their side?

AM I CORRECT?

OR

DID I JUST INVENT A NEW NOVEL WAY TO READ TEA LEAVES?

I don't know. But, what I do know is it's not the math, the science, or the tech moving these markets. Stupidity, irrationality, and herd mentality is driving these prices. And the broken SBD peg might not be so broken after all.

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