Should Steem Go Back To $1?

Disclaimer : I am not a financial advisor. Don’t listen to me. You are responsible for your own decisions.

Considering I just joined Steemit less than a month ago, I don't have the direct experience associated with the rise and fall of the price of Steem Dollars. However, looking at the price appreciation over time, and being told that they are supposed to be pegged at around $1, I did a little digging to have a better understanding of why the price is so far removed from that benchmark.

While my grasp of the system is still a little vague, my understanding is the price difference is due to an imbalance in the amount of people who want to keep SBD vs using them to power up and have more SP. Considering SBD can be sold outside of Steemit, and can therefore be traded to utilize the price appreciation, those who would want to sell their SBD would actually be allowing for the supply to continue to increase as opposed to getting rid of them for more Steem/SP.

If SBD are sold on the market, and therefore stay in supply, then inflation should take place as the days go by, thus decreasing the price, assuming demand doesn't increase at a faster rate. However, most people are instead converting their SBD to SP, and therefore are not taking advantage of the increased price that is available on the market.

I bought my Steem directly from Steem, which I now understand was bought at a premium. I also converted the little rewards that I have received thus far back into SP, which I now understand should have been sold on the market. However, considering the rewards I have converted are small, and the price hit I took from initially buying outside of the market were negated considering the recent Steem price hike, it wasn't the end of the world for me. I do think these could be big differences for others though, and I think it is better for the entire system if we are all smarter with the platform.

While many of us likely want the price of SBD to continue climbing to increase our profits, I also understand that it would be beneficial to have something that is similar to Tether on the system, allowing the continued volatility of the market to be less of a constant factor.

Ultimately, utilizing the current system, the market is going to end up deciding where the price of SBD go. However, don't be discouraged if they descend back around the assumed pegged price, as this will allow for better growth and less confusion among users.

Until then, ride the wave, keep creating good content, and taking advantage of the curation rewards while you can.

*I understand I am fairly new, and therefore some of this analysis could be inaccurate. If I made any mistakes, do let me know. Thanks.