RE: Why I Have Decided To Stop Powering Down My Steem Power For The Long Term
No, when interest rate goes up for USD, there is more incentive to hold on to USD rather than an alternate currency (gold, cryptocurrency, etc) Therefore selling pressure is expected.
Youre correct, as far as you go, but failed to address the point of the article.
Interest has not gone down, it is going down if you want to compare it to a RW interest rate situation, imagine you had an opportunity to invest in a 24 month CD. The interest rate was .075%/day.
If you then learn that the interest yield on the CD is going down to .058% a day in a month, then even lower, the CD does not become a more desirable investment, it beccomes a less desirable investment.
That is to say that no matter how much an X% SP interest rate is encouraging people to hold steem power right now, a lower percentage interest rate will encourage them less in the future.
Of course, this is a wipe right now, but as an incentive to hold for 24 months, it just doesn't track.
Exactly to the point. Thanks for point out areas that I have missed. This is a classic bond investment scenario whereby you are anticipating interest rates to rise thus bond value to fall. The future value of the steem value is taken into consideration in this case. Does the classic formula of FV= Cashflow at period zero x ( 1+R) n still possible to work to compute for steem in this case?
Yep, why would lower interest rates make anyone more likely to hold?! If anything, as interest rates drop so does my desire to hold steem
Because there will be less SP being generated as the interest rate falls. This reduces dilution which is generally viewed as a good thing.
High interest rate, high dilution
Low interest rate, low dilution
These forces are a yin and yang on each other. Both cases are an incentive to hold if you believe in the social media platform. If you don't believe in the platform, it would be wise to cash out. STEEM is nothing without it.