Here’s How To Take Advantage Of The Steem Dollars (SBD)

IMAGE CREDIT

In span of time between November 20, 2017 and December 8, 2017, the price of Steem Dollars (SBD) rose from around $0.96 a piece to $8.36. That’s about a 670% rise in a short while. And sends a sense of security across the platform and players of the SBD market.

I have taken a look at some of these moves in the price of SBD as against the USD over the past couple of months and, as part of my coverage, I have outlined what I consider as being the driver behind the action we have seen and, as a result, in order to enable all steemians know what is expected of them during each spike or fall in the currency pair.

I am writing with the assumption that every reader of this post is aware of steemit.com. >Steemit is a sort of social media, content curation type platform over which authors and content creators get paid for their works (content). This payment is made in a currency known as STEEM and that brings about what SDB is. SBD is a sort of sibling currency to STEEM that’s places a track on the US dollar and offer an easy way of figuring out how much each Steemit would get as pay for the content they create.

Hence, normally, SBD should always trade around the one-dollar mark. Taking a look at action over the last three months, as illustrated on the chart below, and this becomes apparent.

Screen-Shot-2017-12-08-at-12.03.32.png
IMAGE CREDIT

Definitely, posing something like this to the US dollar is going to have its weaknesses and the latest run is one such example of this potentiality for inefficiency. The point to note, however, is that SBD isn’t like a normal cryptocurrency – maybe it’s not running to the moon. It will return to one dollar benchmark, as the blockchain mechanisms on which Steemit rests adapt to the increased price and, in turn, push it back down-its like the normal price theory in economic analysis where price is always adjusted to suit the terms of trade based on the forces of demand and supply.

Oh no! that all seems pretty boring – we can’t really sell SBD. And does it means that there’s no definite opportunity to take a profit from the market given the present actions – urgh?

Well, that's not necessarily true.

HERE'S MY SUGGESTION

The connection between STEEM and SBD is a liquid one in the sense that when the price of SBD goes up, the dollar or bitcoin exchange rate is favorable which, in turn, means that if you cash out your SBD for BTC now and then use that BTC to buy STEEM, you’re going to get much more STEEM for your SBD than you would’ve done just a couple of weeks ago. Brilliant right? Thank me later.

NO YOU'RE NOT LOSING YOUR SBD

Then you can hold that STEEM and convert it back into SBD once things settle down again and the profit you have made is the difference between the value of the STEEM you pick up now against the SBD you sold to acquire it and the number of SBD you get in exchange for your STEEM once you convert it back into BTC to buy SBD when SBD falls back down to its inherent value of one US dollar.

I must emphasize, that there exists a certain degree of risk involved in the exchange rates for the US dollar and bitcoin in comparism to STEEM across the period of time it takes between now and when SBD to return back down to one dollar a coin but, the higher SBD rises, the lower this risk becomes based on the fact that you got more free room on the arbitrage trade.

As always, keep in mind that the market in question is highly volatile market and even these sorts of positions can never be guaranteed- maybe not for a long period of time. With that said, however, as far as quick and easy opportunities go in the market and, especially, in this market, this is one that doesn’t come around too often. As of today the price of SBD has fallen by -29.50% against the USD and -25.71% against BTC compared to the closing prices yesterday. Steemians it's advisable to act fast and take advantage of the volatility. Its not too late.

SCREENSHOT FROM HERE