Is there anybody that can explain to me clearly which factors influence the price of 1 STEEM and WHY?
Hi all,
So I've been reading up on Steemit and STEEM for a week or two now, but there is something which I don't understand yet.
What drives the price of STEEM up or down?
I understand the basic concept of supply and demand, but how do we apply these to STEEM? Could anyone give me a technical analysis of this, and give me a prediction for the future?
So I get the demand part, it's driven by new users that need STEEM for their new accounts, and by investors that buy STEEM because they believe the price will go up at any moment in the future.
The supply part is something I don't really get yet. I read somewhere that around 400 STEEM is created per hour, or something like that? Is that true? Does this happen at a flat rate throughout the year, or does this increase incrementally relative to how many users the platform has?
So how do supply and demand work in this situation? I am trying to understand the analysis a professional investor with full knowledge of the workings of Steemit and STEEM would be making. Which factors does he take into account?
One of my reasonings is as follows: on Alexa.com the Alexa rating of Steemit.com (i.e the traffic the platform receives compared to other websites, expressed as a rank (Google is #1)), I see that the growth of the platform is accelerating over the last months:
(source: http://www.alexa.com/siteinfo/steemit.com)
This means more and more people are using the platform. This is also likely to mean that more and more users will buy STEEM. So, the new users are positively influencing the demand side. But the price is dropping over the last weeks, so the influence of investors that are currently bearish is even stronger. OR there is an increase in supply of STEEM which lowers the price. Now who can enlighten me?
Please be as technical as possible and motivate your opinion well.
I appreciate your thoughts!
Between traders and new coins coming out the price could dive down greatly. Investors are really your key area and I know when Steem hit $2 a pop it seems like many whales cashed out and we are just seeing those effects now as it takes a few weeks to power down. I do expect to see a downtrend here for a while longer as the power downs continue to roll in.
I see, but what is the influence of new users coming into the platform. Everybody is raving about the new records for daily created accounts etc., but in what why does the amount of new user accounts influence the price of 1 STEEM? (I.e. is it correct to say that new users coming into STEEM is positive for the price of STEEM, and if so, WHY?).
The action on the trading floors of the exchanges determine the price of steem. However, they don't tell you everything that is going on there...
You see orders for steem at different prices appearing and disappearing in the Order Book, but you probably will not see the actual match up of Bid and Ask orders that show as the Last sale. You will, however, see the "Spread" between Bids and Asks; the highest Bid and lowest Ask.
On securities markets, matching up of orders is handled by Specialists who "make" the market. I can't answer for how it is done on cryptocurrency exchanges because that has not been revealed to me. Nevertheless someone or a computer has to match up the orders and close the trades. Furthermore, if someone buys or sells a large number of units of steem, they won't do it publicly. They go behind the public's back and sneak it in secretly in order to not move the market significantly and thereby maintain a stable, less volatile market.
So to discover the immediate cause of the price change of steem, you need to determine who or what is matching up Bids with Asks (Buys with Sells) and closing the deal. At that point you will see who or what is "making the market." Supply and demand are general factors, but the actual price of steem is instantaneous and posted as the Last sale. Reporting of the Last sale gets delayed and it may be minutes before you actually know that number, and by that time other trades have transpired, perhaps on other markets, making the "Last" price outdated.
In summary, you need to go to an exchange (a private business) and investigate for yourself to determine the exact point where a "Trade" is made. Then you will know why the price of steem went up or down - It is because the "Market Maker" made it that way!
I hope this helped...