We're Going to Need A Lot More Powerups

The chart above is from Hive account@penguinpablo's daily reports. It shows how much Steem has been powered up and powered down each day. It also shows the sum. As you can see, in recent days Steemians have been powering up like mad!

Unfortunately, to have any real impact on supply (which as basic economics tells us, affects price), we're going to need a lot more powering up. A heck of a lot more.

Source

This chart by Hive account@socky is that of liquid and total supply of Steem (note that the axes don't start from 0, you can find that chart on his post too). With increased SBD conversions at a low Steem price, total supply is increasing faster than normal. Also, the recent power ups are only a blip compared to the overall trend of increasing liquid supply. While Steem inflation is supposed to happen at 8.5% per year at the current rate, liquid Steem can inflate and deflate more dynamically due to power ups and power downs. You can see in this chart that Liquid Steem has increased by over 10% in 7-8 months.

Further, SBD conversions actually make total Steem inflation much less predictable than the algorithm would suggest. Some of the Steem created by the algorithm is 'virtual steem' hidden behind SBD. When the SBD conversions happen, that virtual Steem becomes real Steem but at a rate determined by the price feed. 1 virtual Steem created in January can potentially become 10 real Steem in November. This is the reason for the sudden uptick in total Steem at the end of the graph.

Conclusion

In order to combat the increasing supply which is happening at a faster rate than normal, we will need to see a lot more power ups, or we will need to see current levels sustained for quite a while. Otherwise we will likely to see faster than normal supply increases exacerbate the problem of the falling price in this bear market.