The Invisible Hand In The Price Of Steem and Hive
It was Adam Smith, the father of classical economics, who wrote in 1759 in his Theory of Moral Sentiments that there is an invisible hand that ensures order in the economy. A cursory look at the events around Steem and Hive within the past six months suggests that there is an invisible hand that strives to level the price of Steem and Hive, to the extent that none leaves the other considerably behind.
By now, one would have thought that the price of Hive would have doubled that of Steem because of the larger and more robust community backing it. But that has not been the case.
Although at its peak, Hive managed to reach over 90 cents in his formative days, exchanging for over 3 Steem, the invisible hand came to work, clandestinely levelling up the prices in one of the most enigmatic fashion.
Prior to the fork of Steem, which witnessed the birth of Hive, the complain was that Steemit Inc was allegedly flooding the market with Steem, creating an albatross for the progress of Steem. With a new founded, decentralized blockchain in Hive that has the loyalty of the majority of the erstwhile Steem community, the least thing to expect was seeing Hive worth twice as much as Steem.
But apart from the circumstance that was previously mentioned, the price of Hive and Steem upto this very moment has remained only a few cents apart. The invisible hand, it would seem, ensures that the price of Steem does not significantly outperform Hive and vice versa.
What Exactly Is The Invisible Hand?
The Invisible hand, as I perceive it, is the extent to which market sentiments parallel the price of Steem and Hive. Since the latter is a fork of Steem, the market appears to believe it to be overpriced each time it outperforms the former and vice versa. This results to a sell pressure that levels the price of both tokens.
Another dimension to the invisible hand results from big actors who sell off their Hive for Steem and Hive and vice versa, depending on which is outperforming which at any given point in time. The implication is that we tend to see, judging from recent history, the destiny of both tokens being intricately entangled.
In conclusion, the invisible hand may very well still be active in the affairs of Hive and Steem until such a time when either the forthcoming altseason will severe their ties or until when both tokens no longer operates on identical reward distribution mechanism.
Dear @gandhibaba
It's great to see your post within PH community buddy. Hope it's not last time and I will see you more often :)
I clearly remember that during the time of my Uni, when a studied micro and macro economy - I was also told about "invisible hand that ensures order in the economy".
Those surely were different times. And economy functioned very differently from the way it does today. Mostly because role of central banks has been limited and economy was way more "free" than it is today.
In current days I see FED and other central banks as an invisable hand, which ... surely doesn't ensure order in the economy. It's more like an "evil witch", mixing ingridients rapidly and trying to figure out what will be final result.
:)
Ehm. You're right. It didn't really occur to me that there may be actually any relation between those 2 any more (at least not on that scale).
Also, larger community = more rewards being dumped on the market. Size of community doesn't matter that much. What matters the most is ... how many of those who participate in HIVE or STEEM are actually selling their rewards.
And my impression is, that there is more people doing it on HIVE than on STEEM. Parly because rewards on steem are much higher now (comparing to HIVE), which does encourage large accounts to hold to their staked SP.
Interesting read and conslusions. Have a great day ahead,
Yours, Piotr
I'll have to agree with the fine points you've made here. The banks are somehow involved in playing the role of the invisible hand in the larger economy but not yet very much involved with crypto at the moment.
Interesting thoughts but I do not have any evidence to support your assertions. But I think that if you're right, we should have Steem far more valuable than Hive is right now. I think the correlation has something to do with the identical reward system.
Ps: This is surely not my last post on PH. Cheers!
I can only hope so :) I wouldn't like to lose contact with you and I actually really enjoy reading your publications. (I hope you also understand, that I may not have enough time to read posts outside PH).
cheers,Piotr
Thanks it's always my pleasure to post within PH
good article, from my point of vita the coins rise or fall in value depending on how healthy the market is around them, many coins do not develop a market exchange and this makes their value stagnant.
It is unpredictable but what I have seen is that when you count that they have a lot of power they do publications speculating on different aspects, prices change immediately, so I think there is an invisible hand and they create opinion arrays to their liking manipulate its price.
Thanks for sharing your thoughts on this topic. It's very much appreciated.
Hi @gandhibaba
Defi is getting all the attention, I don't know what will happen with Hive or steem. If something doesn't happen that allows these platforms to get into the defi wave, that can add value from this new trend, they will not finish starting...
As well, as many folks sell constantly that generates a selling pressure on the price.
Hmmm. I guess I got your point about this invisible hand. At first I was thinking soon hive will hit $2 looking at the rate it was going up back then
There are undoubtedly market manipulators. And I am with you in thinking that Hive would have outperformed steem. Did you take into account things like I cannot withdraw my steem without block trades and yet I can withdraw hive? Has there been analysis on differing user bases based on geography
I think there are other means through which you can sell Steem. You can deposit it to Binance or Poloniex. Being a fine writer yourself, I'll like to read your thoughts on the questions you asked. For me, I think geography doesn’t play a significant role. Cheers!
Well, I suppose at some point I'll consider some sort of private or masked network. For now I hope that either binance or poloniex is allowed in my state at some point. I think Florida is like one of five or so states that blocks these two exchanges.
Sounds like a conspiracy theory.
It does, indeed. What about good old fashioned market demand and offer?
Lol
Yep. Traders sell between the coins and balance them, taking profits.