STEEM to $10 USD? This is the wrong question to ask or even think about.

in #steem7 years ago

When you consider where to spend your money, you have to evaluate opportunity cost. You only have so much money to spend. The more money you spend on Option A, the less money you have left to spend on Option B.

Suppose I have $10,000 available.   Should I put this money into a real estate ETF for good dividends?  Buy precious metals in anticipation of USD collapse?  Follow Ben Stein's advice and just buy the Spiders (SPY) ? 

Or should I put my $10,000 into cryptos? 

This post isn't providing financial advice, so I won't attempt to answer these questions for your personal scenario.  The answer is complex. And different for every person. 

What is your risk tolerance? How does this $10,000 fit into your overall financial plan? Is the $10,000 play money you can afford to lose completely? Or does it represent your total life savings? How old are you? How close are you to retiring or wanting to retire? What is your family situation and how many people are dependent on you?  Etc, etc.

For sake of argument, let's assume you decided to put the $10,000 into cryptos, since you can afford to lose 100% of your gambling stake.  Stated differently, the $10,000 should be money you would have otherwise been happy using to buy lottery tickets.

Let's assume you had to make a crypto purchase decision back around Jul 19th.  And you had to choose which coin(s) to buy with your $10,000?  

You're probably guessing, correctly, that this question has some relevance to my personal situation.  I didn't invent this scenario out of thin air. Been there. Lived it. More or less.

Since this is a steemit post, let's focus the question on just two coins. 

STEEM versus BTC.

Would it have been better to put $10,000 into STEEM on July 19th?   

Or would it have been better to put $10,000 into BTC on July 19th?

The math is simple.  I'll do it for you in two lines below.

$10,000 in STEEM on July 19th, at $1.22 price point, would have purchased about 8,197 STEEM.  Cashing out today at a STEEM price of $1.11 would net approx $9,098. Resulting in a loss of more than 9%. Resulting in a loss of more than $900.

$10,000 in BTC on July 19th, at $2,372 price point would have purchased about 4.22 BTC. Cashing out today at a BTC price of $3,600 would net approx $15,177. Resulting in a gain of more than 50%. Resulting in a gain of more than $5,000.



I decided to do this analysis now, since BTC price is going through a significant retrenchment.  From a high of almost $5,000 it has recently fallen sharply into the $3,600 range, which is a drop of almost 1/3.

No one can claim that the analysis is fatally flawed because I picked a point when the BTC price was peaking, which might bias the result in favor of BTC.

Exactly the opposite. I picked a point when BTC price has just dropped by almost 1/3.   

The conclusions are stark. And incontrovertible.

As an investment vehicle, STEEM has sucked over the last two months.  

BTC appears to be far and away the better investment. Definitely the better investment over this particular analysis period,

Since May'17, when STEEM started at $1 USD, it jumped up to approx $2 USD, and has since then slowly sunk back down to approximately $1 USD.  Round trip to nowhere. The green line above meanders more or less sideways, but slowly trending down by about 9% over the analysis period.

You wouldn't have lost a lot of USD fiat money investing in STEEM.  But you would have lost some. 

In contrast, BTC price has been relatively more solid than STEEM.  Both have significant volatility, but on average BTC price is trending up. The STEEM trend is solidly sideways. At best. A fair  assessment would report that STEEM is gradually losing value against BTC on a daily and weekly basis. 

Look at the yellow line in the chart. The yellow line, relative STEEM value versus BTC is much more important than the USD fiat price of STEEM, in my opinion.

Over the most recent two month period, the relative price of STEEM versus BTC has been cut in half.

You can ask and ponder the question of whether STEEM may eventually get to $10. It might. It might not. I don't know. Truth is no one does, despite any protestations to the contrary.

But to close out by linking back to the title, asking whether STEEM gets to $10 is the wrong question.

The question you should be asking is, what will the price of BTC be when STEEM price increases by 9X and hits $10?

Will BTC price be higher or lower than $33,000, when STEEM gets to $10?

Because if you are planning on making money, or getting rich, or even retiring on your "winnings" when STEEM hits $10, you'll potentially feel a touch foolish if BTC is at $100,000 per coin at that time.  You'll have left an additional 300% gain on the table, by placing your bets on STEEM instead of picking the winner BTC.

Alternately, if BTC is only $10,000 when STEEM gets to $10, you'll look like a genius since you will have made an additional 300% by betting on STEEM vs BTC.

When STEEM gets to $10, what do you predict the price of BTC will be? $10K? $33K? $100K?  other?

If I'm still around when STEEM hits $10, I'll send one STEEM to the person who most accurately predicts in their reply below, the BTC price at the fateful moment when we see STEEM trading at $10.

Comments welcome.

STEEM On!!

DaveB

image from coinmarketcap.com

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What if you bought $1000 worth of Steem or BTC on March 19th? Steem has been a much better investment so far in 2017 than BTC. Too bad I first heard about Steem at $2.5:) Answer: Steem $10, BTC $10000.
But, honestly, I do not know. I am contemplating writing a post about this: The X value an entity creates, is independent from the Y% of X it captures. I do think Steem creates a lot of value, at lest for me personally. I have no doubt that blockchain technology will revolutionise the world, but it is difficult to say how much a given token will appreciate.

You are very bullish no STEEM. 9X increase in STEEM in same time that BTC only gets to $6K.

Will need some big catalyst to see that type of STEEM price increase

Just some food for thought.
Firstly, if you are not bullish on Steem, why do you buy it?
Secondly, I am actually not that bullish on Steem, but being on this site has given me so much more than money can buy. I have managed to utilise my creative sides and I have also learned a lot. That's things that money can not buy! But truth be told, I am also somewhat sceptical of Steem. BTC is per definition valuable, whereas Steem seem to be kind of free money, especially for people in the third world, which we compete against. It is not profitable enough to own SteemPower imho:) Thanks for your post davebrewer. Steem on!

Why buy it? It was an experiment. Learned a lot. Which is the definition of a successful experiment.

What a thought provoking post. What to do with ones money? People often look at the profit/loss without realizing that one can lose even when profiting. Opportunity cost is something that is rarely discussed. Of course, we all know things are much easier in hindsight.

I guess the question is where can one find the better growth rate. Obviously, over the time frame you discussed, BTC had it Steem did not.

Now for my guess....since you are looking for a 9 fold increase in Steem to get to $10...I am going to say that BTC, with so much money set to enter the crypto world, will have a 15 times increase....

BTC $55,500.

A little more than Dimon's rise before the fraud crashes.

Full upvote for giving the answer that matches my opinion, LOL

Not allowed to grade papers this way if you are an elementary school teacher.

But this isn't elementary school, so I get to grade however I want.

There is some merit to your point, but I don't completely agree. STEEM does have built in inflation. At around 9% per year. So supply is increasing. But in a predictable way, that everyone knows in advance. After all, the rewards pool has to come from somewhere.

But to compare it against USD fiat is slandering STEEM. The printing presses for USD are turned on and off in an arbitrary way, and the amount of printing of USD is criminally large. More than double over last 10 years.

Full upvote back at you although yours is bigger than mine.

You made me laugh with the I get to grade however I want.....

It is your post on a non-moderated, decentralized platform...damn right you can grade how you want.

Although I will say the union wont be too happy with you....

You guys and gals have to remember, Steem is an infinite supply currency, and it is very difficult for it to increase in value, and even harder for it to maintain an increased value.

Think of Steem as you would a dollar, it actually decreases in value over time, because so much of it is printed in a continuous fashion, and the same could be said with Steem.

The only reason why Ethereum has increased to an unrealistic value, as an infinite token supply, is due mostly to hype, and the fact that you could buy into initial coin offerings with it. So, do keep that in mind the next time you get frustrated that the price of Steem always seems pegged to the dollar.

There is some merit to your point, but I don't completely agree. STEEM does have built in inflation. At around 9% per year. So supply is increasing. But in a predictable way, that everyone knows in advance. After all, the rewards pool has to come from somewhere.

But to compare it against USD fiat is slandering STEEM. The printing presses for USD are turned on and off in an arbitrary way, and the amount of printing of USD is criminally large. More than double over last 10 years.

Hmm, I suppose I was referring to Steem's performance over the last six months, not it's actual capabilities. Over the last six months, it sort of kinda just averaged back out to around a little over a dollar, hence the opinion.

I really do hope it gets better, because I too believe in it, but so many people are always selling it, and with such a large supply, that it is difficult for it to keep any value in my opinion.

BTC: $43,258

I totally agree with you @davebrewer. I especially thank you for being frank about Steem here on Steem itself. Unfortunately, many people chose to ignore that we have a problem here.

I would like to add some comments:

1 - After investing for some time in cryptos I realized that the $ gain is not the right metric of success here (except for BTC itself). What is important is how much have earned in terms of BTC? Oddly, most cryptos have not gained in terms of btc.

2 - Steem is not an exception. However Steem is not doing well in terms of $ value neither! I think that the main reason for that is that the Steemit, Inc. is not doing its job well enogh. I have explained my concerns in these two articles:

3- I was planning to power down and sell my steem, but the dev team promised they are rolling out some major updates and marketing plans soon. So, I decided to wait for some time and see.

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I am going to say 70,000 because I was the 70TH upvote.

Big upvote for a choice way above $33K.

You got my attention. I'd struggle to even call this an educated guess but...STEEM=$10 & BTC=$60,000. Thank you for not asking for rationale behind this number :)

Directionally accurate. Good answer.

Glad you don't think it's outrageous lol. I got in the game late and I'm glad I got some more coin this week.

you should also analyse in march to may :) while price was like 17 cents so it was like x5 , and bitcoin like +70%, so all depends what dates we choose :)
but bitcoin for sure is strong

Sure. Picking different analysis period will give different results. But my question is looking forward, not back. STEEM is $1.12 today. BTC is $3,600 today.

Which coin will be first to record a 9X increase, relative to today's price?

STEEM On!
DaveB

i think steem have more chance to make x9 because they got a lot less market cap , plus we increasing in traffic every month, and problem of bitcoin they have too big fee and if it increase again then fee will be more than and more.

I can agree with that based upon the points you made.

However, with so much money entering the arena from the institutions, wouldnt bitcoin get the largest share since it is so well known? Do you think that an investment adviser will say you have to diversify, pick up some steem to balance your portfolio?

bitcoin is very well known, but his marketcap is huge so it will be harder to make double up each time than steem with small market cap. Also to diversify its good to buy not only steem but other crypto that have real activity not just in paper .

LTC has a lot of real use cases, for actually buying stuff. So that should be a positive for LTC.

Market cap for BTC is actually still small, if you compare against total supply gold, or total supply USD, or total supply Euro, etc.

BTC is going to open up for more mainstreet investment in the next year, and then all the mutual funds are going to come pouring in with lots of investment dollars to park.

An investment fund manager that doesn't have money in BTC will be fired if the fund is underperforming. Per TM4450 point, no investment fund managers will be fired for not holding STEEM

I'll give it a shot. I think Bitcoin will be at $26,500.

You are betting that STEEM outperforms BTC. I am not so convinced

Me either, but I think that Steem hasn't had a large surge yet and that Bitcoin has had several. Bitcoin is going places, but I don't know that it will do so exponentially. Steem still hasn't reached a high level of saturation yet. When that happens, it is anybody's guess where it ends up.

I will say I'm not staking much of my own money on my prediction ;) I'm very curious to see the results though.

Interesting post. I used the same rationale when trading the dips. For example when BTC hit a low of $3000 Friday morning, instead of buying BTC @ $3000, I bought NEO at $15. My belief is that NEO will bounce back to $30 (price point it has crossed before (in fact NEO's high was $50) which is 100% gain before BTC can get to $6000 (which would be a new all time high). I'm only doing this for short term trading. For long term hold, I see your point.

Entering your contest:
BTC will be at $30,000 when Steem hits $10.

Upvote for providing a price estimate. Your conclusion is STEEM is a better investment than BTC, in terms of the next 9X price increase

There's also another factor that has affected the price of Steem tokens negatively over the past few months: the inexplicable halts on Poloniex. Steem deposits and withdrawals have been halted on Poloniex for more than a month now!

I think Polnx has had lots of issues with many coins

I think it's been at LEAST like 2 month and it's totally lame lol 💩

Yeah, I lost count already. There are a lot of big, deep-pocketed celebrity investors on Poloniex, and Steem being disabled has a major impact on the valuation of the token. If Poloniex re-enables Steem, watch out for a big rally as the whales start to accumulate tokens at depressed prices.