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RE: What If Exchanges Won't Be Able To Quickly Regain All Their Powered Up Steem?

in #steem • 5 years ago

Basic economic principles are telling us that demand will increase. When demand increases, price increases.

Erm.. No.

It's a supply decrease. And this do not drive prices up.

Here is how it works:

Person A is selling Steem for 10 0.2 USD
Person B is selling Steem for 20 0.3 USD
Person C want to buy 20 Steem for 0.2 USD only.

Person C get 10 STEEM for 0.2 USD and now there is a 10 steem 0.2 USD order.

Now, there is a "stand-off".

If another Seller enter the market, he will sell for 0.2 (supply increase)

Price only rises to 0.3 if another buyer enter the market (demand increase).

Now, supply decrease only make a difference if sellers percieve that there is a demand increase. Since there is a shortage of the 'good' on the market, sellers will try to make more profit.

Decreasing supply do not increase the price, if there is no demand.

5 years ago in #steem by
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     5 years ago 

    If there is a decrease in supply of goods and services while demand remains the same, prices tend to rise to a higher equilibrium price and a lower quantity of goods and services.

    From here.

    I agree with this:

    Decreasing supply do not increase the price, if there is no demand.

    But my assumption was that demand will remain the same (see the quote above).