Investing in Steem Power? The current price of Steem is only one factor to consider
Making an investment is a big decision, especially in a cryptocurrency where there is no shortage of volatility and lack of regulations. Making an investment can further be complicated when there are three options: Steem, Steem Dollars, and Steem Power. On top of that, the price has seen a steady decline since it spiked a couple of months ago, and it seems that everyday there's a new post about how low the price of Steem is dropping, and wondering if this is the best time to buy, or if we're headed into a black hole, never to return again.
The current price of Steem is only one factor to consider
What follows in this post may not be news to everyone. I'm sure a lot of the veterans here are aware of most/all of things I'll be talking about, but now that we're closing in on 100,000 accounts, and the majority of those have registered in the past couple of months, coupled with lower prices, this may be an optimal time for many new members to invest, and I'd like to point out a few things beyond the current price of Steem in an effort to get the most out of their investment.
The magic of Steem Power
Steem Power is sexy. It gives you larger curation rewards, more influence on posts, and can help protect against the inflationary nature of Steem. Your Steem Power is constantly on the rise, and because of that, you're guaranteed to have more Steem when you cash out then you initially invested.
Behind the facade of Steem Power lies the real asset. The Vest. Or MV. Your Steem Power goes up because the cost to convert Steem into Steem Power is always going up.
When I first joined here it took approximately 250 Steem to get 1 million vests. As of today it's up to roughly 350 steem per MV. That means even if the price of Steem remains the same, it will always cost you more to convert into Steem Power in the future. Of course the price has been falling at a faster rate than the inflation of Steem, so for the last couple of months, price was the most important factor in deciding when to invest. However now that we've reached what I think is close to a short term bottom, things may get a little trickier in the future. Because of this I'd like to bring some attention to a more important price to look at: the price per MV.
I took this screenshot yesterday, and it comes from https://steemd.com/distribution.
I love it because it does the work for you and gives you the current cost of 1 MV which was ~ $157 as of yesterday. If you're investing money or transferring BTC you already have, this price is more important then the price of Steem itself, because it takes the constantly increasing conversion rate into effect. The conversion rate is also shown here, and will rise indefinitely. This alone doesn't necessarily help make a better decision on when to invest, because price is still important and it's hard to judge which way the market is going to move in the short, medium, and long term, but I never see price per MV mentioned as something to consider, so I thought I'd throw it out there for anyone interested. You can also take this a step further and look at the historical prices and try to determine the cost per MV you'd like to invest at, or even the MV per BTC ratio that looks like a great opportunity. We are currently at > 4 MV per bitcoin, which is the best it's been since the spike in July.
Another potential variable is...
Here is a screenshot of the top Steem Power holders and who is currently powering down. We can see at the top right that 93 out of the top 200 are currently powering down, and we can see when those power downs get paid out. Tracking this can help give an additional idea of where the price may head in the short/medium term, assuming a high percentage of the powered down Steem gets sold on the exchanges, which I'm assuming it does. Of course increased growth and new members may buy those power downs up as soon as they hit the market, so this along with TA, EW, and a magic 8 ball will not predict price movements all the time, but it is something to think about.
One of the great things about Steem is that you don't have to invest to anything to get Steem Power. You get some just for signing up. You get some for writing posts like this. You get some for voting on blogs you like. You even get some from mining or becoming a witness. Over time, you can even gain an even larger stake of Steem Power by not powering down. It's pretty amazing that there are so many possibilities to participate in addition to an investment of your own, and one of the reasons I've spent so much time on here and will continue to do so in the future.
I'd like to sum up this post be reiterating that in general, the price of Steem has been the best indicator of when to invest and power up over the past couple of months because the price has been falling quickly since we saw the ATH in July. Despite this fact, another variable to take into consideration is the price per MV, which increases over time even if price does not. Although many of you may know about these resources and ideas, the user base is increasing quickly and I felt it was a great time to introduce them to those who might not know all the intricacies of this amazing platform.
It probably goes without saying, but the "Pay me 100% in Steem Power" box has been checked on this post. I'm here for the long haul, and would love to know what you think about everything in this post. Thanks for reading.
*All images are courtesy of pixabay and my iphone*
I was interested in your idea that tracking when the whales power down gives an indication as to when the price will dip. Presumably this works backwards too, as power downs happen every even days. I wonder if anyone has plotted the power downs in a chart against the price to see who tanks the price most?
I haven't seen anyone chart that yet, but it would be very interesting and I would love to see it. Along with seeing when the whales powerdown, it's also possible to see when they send their Steem to the exchange to sell it, so it would be possible to track that type of thing and look for patterns/trends.
A nice post and thanks for sharing. Up-voted, now following & looking forward to reading more of your stuff. I posted a piece earlier about the potential valuation of Steemit that you and your followers may find interesting. If you get a minute have a read. It has certainly got my Twitter followers thinking!!
“STEEMIT is no ordinary Social Media site, it’s pure GOLD..!!”
https://steemit.com/steemit/@stephenkendal/steemit-is-no-ordinary-social-media-site-it-s-pure-gold
Cheers.
Stephen
Stephen, thanks for following and sharing. I'll check your post out, I love the title!
Thanks I appreciate the support. Hope you like the post. Stephen
Good Post,nice reading. Funny, just added the price per MV to my daily Report :) And yeah just bought 1 MV yesterday, price was irresistible.
Excellent, thanks for adding it, I love reading your daily reports. Very excited to see them going forward.
Is 1 MV one Steemit account? So if that's true you've bought an extra Steemit account?:) Please correct me if I'm wrong
usefull summary, I didn't know SteemDown.com, thanks.
Thanks for reading, and I know what you mean, theres so many sites and resources its hard to keep up.
This is a very helpful and informative article. Thank you for helping to teach more people about some of the lesser known aspects of investing in SP. I'm sure this is info a lot of potential SP investors will want to know!
I really appreciate this, and I hope you're right about this helping a lot of newer users. I've enjoyed a lot of your posts so it's great to know you feel the same.
Thanks :)
Very cool.
This is a side of things I haven't gotten my mind around. Thanks for sharing. The SBD, Steem and SP all make sense, but vests confuse me.
What do vests ultimately affect? Other than the value/cost, what is the significance in my interaction on Steemit?
Also, if someone is powering down and decides they only want to keep half of the Steem they just powered down and put the rest back into SP, did they just sacrifice vests (because it was lower when they initially bought Steem)?
Always learning... :)
Both great questions. I believe vests ultimately affect everything that SP does, so your curation rewards, how quickly SP goes up from "interest", and the amount you add to a payout when you upvote. What I haven't figured out yet is if two people both have 5000 SP, do they always have the same # of Vests or could it be different depending on when they powered up, etc. That's something I'd like to look into more.
For powering down, yes I believe you would lose a small amount of vests if you reinvested half of the recently powered down Steem since the conversion rate would be higher. Might have to look into that more and see if there are any scenarios where that doesn't happen. Thanks, you have me thinking about a lot of new things now which is always good.
Glad I could help promote thought. :)
These could be really important in planning powering down priorities. If it's a factor, then it would also bring up the question as to which SP you're powering down? The stuff you bought two months ago or two weeks ago. Strategies would change in accordance, right?
Thanks for the quick and thoughtful response.
Very informative. Still confused though being new to Steemit. So, When should I start trading Steem?
That's a great question. I think it depends on your goal, are you looking to buy and sell Steem to eventually power up into Steem Power? Or are you looking to make a quicker profit to convert it into bitcoin or cash?
Looking to make quick profit.
Steem is kind of tough for quick profits because it's so inflationary... I would try with Steem Dollars if I was going for a quick profit because if you buy when they're in the 85-90 cent range or lower, you're almost guaranteed to be able to turn a profit at some point because the range is somewhat predictable.
One thing you could try with Steem is using the SteemDown website to see when a bunch of whales are about to get they're payout of Steem, because then they may go dump on the exchanges. If you see the price drop hard on a day like that theres a good chance it will rebound soon after... at least for a day or two.
Thanks for your advice. You should start a group in here for trading cryptocurrencies. Comment?
I invested on steem on exchagers more than a month ago and you could imagine how highbthe price when i jumped in. Steen has been low this past days and i never hesitatedbyo invest at this low price and im glad steem is pulling up... hoping it could be the start of an uptrend...
I jumped in a while ago too when the price was high, and have luckily been able to bring my avg. buy in price down some over the past few weeks. It would be nice to see the trend reversed, here's to hoping you're right about that!
Wow thanks, newbie here. Such good information. This is great. Sooner or later a high income earner here at Steemit. Thumbs up for this!
Thank you! You will definitely be a high income earner, just keep putting out great content and eventually it'll happen.
Word.
This was informative.
I'm about to get my first SP purchase made and glad to do it sooner than later! haha
I invested when Steem was around $3.5 - $3, that was a bad call on my part and not taking the inflation model into consideration! This post has some great info
I made the same mistake at first and have been trying to cost avg down since then. It makes sleep a little easier knowing if I post and curate on a consistent basis my avg buy in price will continue to go down as my rewards bring my SP up.