For investors worried that STEEM's sudden rise is unsustainable, you'll want to stick around for this analysis! Most long-term STEEM price charts are now mathematically deceptive -- unless a proper context is provided, many newcomers and veteran Steemians might get misled by bearish prognosticators and various "chicken littles."
Granted, a conservative approach to finance is usually regarded as the safest pathway. I agree to a point -- risk mitigation is necessary, but the magnitude of the mitigation must be congruent with the risk level. The problem with bearish forecasts on STEEM (and other digital currencies) is that they overlook a critical difference between arithmetic movements and logarithmic movements.
Most Charts Are Arithmetic...and That's a YUUUUGE Problem for Cryptocurrencies!
Take a look at most price charts provided for bitcoin, ethereum, STEEM, or any other cryptocurrency. Almost always, the technical data is arithmetic. This simply means that for every one unit of movement along the vertical y-axis, the asset price moves up by one unit, typically one dollar.
This is the most accurate way to assess blue-chip stocks, which don't typically generate wild swings in market valuation. But what about cryptocurrencies? Just in my extremely short time with STEEM, the up-and-coming cryptocurrency has spiked to nearly four-digit percentiles. Using an arithmetic chart would be highly inappropriate as we would not be able to chart the magnitude of price action.
Magnitude is much more important at this stage of the game for STEEM. Consider an asset that moves from $1 to $2. In an arithmetic scale, this is simply a one dollar movement. It's the same as an asset moving from $99 to $100.
But is it really? A move from $1 to $2 is a 100% skyrocket. A move from $99 to $100 is only a 1% profit. In order to capture the true essence of STEEM, we need to see magnitude. That's why the base-10 logarithmic scale is so valuable to cryptocurrency analysis.
Revealing the TRUE Picture of STEEM!
Let's re-examine the STEEM price chart, this time through a logarithmic scale. Additionally, we're going to analyze trading volume also using a logarithmic scale.
Doing so reveals that rather than a wild swing in valuation, STEEM has been steadily picking up, forgive the pun, steam. Rather than some speculative gamble leveled by some unknown "hand," the rally is measured and, for lack of a better word, responsible.
The dead giveaway is the base-10 logarithmic trading volume. If this was a truly unsustainable valuation swing, the volume would have spiked considerably, and then died down once the price collapsed. Yet from a magnitude perspective, investment sentiment for STEEM has gradually increased since the beginning of this year, even after the collapse from $1.30 down to current levels.
STEEM is the Real Deal
I can't stress this enough -- STEEM is the real deal. Again, the volume magnitude confirms this point. Investors are buying into the cryptocurrency story, dollar by dollar, word by word. Fundamentally, you can see this for yourself.
How many new folks have joined the Steemit community? Popular YouTubers are abandoning the once-vaunted platform en masse. On a personal, anecdotal note, I have received numerous messages from my YouTube subs that have thanked me for crossing over to Steem. That, my friends, is the trading volume that you see steadily rising in magnitude!
Furthermore, I would dismiss the "ponzi scheme" talk as nonsense. Content creators are coming to Steemit because the other platforms are fascists -- that's the plain, ugly truth. People see value in Steemit, and will continue to see value in it, whether the STEEM currency ebbs or flows. Remember -- people have dedicated a good portion of their lives to Facebook, Instagram, and YouTube, largely for ZERO monetary rewards!
So is STEEM a scam? Ha! Whether it hits $1,000 or back to 10 cents, the community is generating substantive traffic. But the math is clear -- if you had to gamble on which trajectory is the most accurate, go with the former!