Regardless what you do, and even when it seems you've done all the right moves, the markets have a unique way of making you feel foolish and uninformed. Sort of like playing poker, if you can't find the "sucker" at the table, odds are it just may be you.
And here we go now with SBD teasing $10 US each, when they "should" be worth $1 US. How can that even be possible? As I've often told others, pricing of just about everything is rather arbitrary and based on people's perceptions and beliefs. That's why you should never short an asset (or currency gone "asset") without a strict game-plan in mind. I felt pretty clever trading in my extra SBD for STEEM in the $2s and $3s (around 50 SBD cents). Now, not so much that STEEM is selling for under 13 cents SBD each...
The reality is that while something may seem ridiculous price-wise, over the years, I have also witnessed worthless stocks (as one example) trade from 50 cents to $100/share, and back to 50 cents, destroying countless trading accounts along the way from those who firmly believed "there's just no way it can go higher than that"! And as we have all witnessed countless times now (even if you've only more recently become familiar with markets through crypto), nothing attracts attention better than skyrocketing prices. So technically, SBD's exponential rise also stands to attract a great deal of additional attention to STEEMIT, even if others may think it's a "bad thing" that SBD has currently become "unhinged".
In the short-term, if demand severely outweighs the current availability (the float and instantaneous liquidity) of an asset, all bets are off. And just like with bitcoin, while it could very well drop back 50% in a heart-beat, it can also very well double again, as I've been parroting in the various STEEMIT-related hangouts on discord, especially in light of the ridiculous "Operation DragonSlayer" rumors that so many seemed to "buy into" the past few weeks. More on that later...
And that's the thing with SBD. In the short-term, if some big whales want to come in and buy the crap out of SBD, well, there were only around 3.5 MILLION SBD outstanding. That just may be pocket-change for a well capitalized crypto-mogul to have some fun with. If they sell into the spikes, and buy back all the incoming float as it settles back down at a higher level, they can rinse and repeat almost indefinitely as long as they can keep attracting more attention (aka demand) at higher prices without letting things get too far out of hand too quickly (ie. the ultimate blowoff phase). That's sort of what I see going on with bitcoin (and now think... dun dun dummmmm.... "Operation DragonSlayer")!
Scare as many people as possible out of their bitcoin positions so the "deep pockets" can reload the boat and lock-up the float. Then start stair-stepping back up again until it unfolds into a whole new run from a new higher price floor. To me, this is the ultimate in market "FUD" (spreading "Fear, Uncertainty, and Doubt")! As I wrote last Sunday in another discussion about it in the Whaleshares Discord chat...
alexpmorris: seems like some big group likes to start friday night raids in crypto
kind of like all this dragonslayer stuff everyone keeps fretting over too, what a great way to try and orchestrate the next short raid to 20K btc lolalexpmorris: but regardless, didn't say any of it makes sense, but if someone wanted to try and create another leg up with a large part of the float locked up, the best way to do it would be to scare everyone out of their positions and then force them to chase all the way back up, again
pumps generally occur on the upside, not downsidealexpmorris: if someone wanted to orchestrate something like that, why even leak it with fancy names such as ... duh duh duh... "dragonslayer"! lol
Possible solution for SBD shortage?
In the stock market, when share prices go nuts, companies will often issue more shares in a "secondary offering" to increase their working capital so they can take advantage of the huge price increase. BioTech stocks are notorious for doing this, especially after releasing "amazing" trial results that cause triple-digit price gains.
As for the STEEM blockchain, this could be a great opportunity to pump up the reward pool. For example, one possible solution would be for the STEEM blockchain to have witnesses track the market price of SBD as well, and if prices get too far out of whack, they can designate the chain to "print" more SBD to match the demand and "sell it" on the internal market to buy STEEM, which would go into a sort of additional "reward pool" account. Once SBD/USD prices normalize and converge back to $1, the account would then start buying back the newly issued SBD liability it created (which would also now provide a bit of a floor for SBD as well). After the "operation" is over, and the account is flat once again, accumulated profits could be added to the reward pool, and/or used as an additional support mechanism for SBD if it falls below a dollar at some point.
😱😱😱 "Operation DragonSlayer"... 😱😱😱
Going back to "Operation DragonSlayer", pumps and market manipulations generally take place to the upside. It's just too costly (interest due on borrowed money, cost of "borrowing" shares), and too risky (short squeezed by the original share owners calling in their loans, raising borrowing costs, etc) to carry massive short positions hoping to "push down" the price of an asset. And as for bitcoin, how would it make sense that a "group of insiders" want to destroy the price of bitcoin to prop up "bitcoin cash" and make that the "main bitcoin fork"?! If anything, it's in everyone's interest holding any BTC to have more value in ALL the chains. I mean, if you can cut your wallet in 3 parts, and have it worth more in split 3 ways than one, why the hell not if there's some "sucker" out there willing to buy it?! The more the merrier!
For those who want to better understand how pump & dumps are orchestrated, you may find some interesting tidbits in Martin Armstrong's article: "Do People Hear Only What They Want to Hear?":
I learned early on that to professionally hedge, one had to navigate the brokers. The only way to deal with them, was to play one-off-against-another, use related markets to confuse and hide your strategy, or else fall prey to the Investment Bankers. In other words, if you had a large position of gold that you wanted to sell, you go to a broker asking for a market in silver. He gives you a quote, and you then buy taking what will become an intentional loss. You go back to the same broker and now ask for a quote on the real market you are trying to sell – gold. He will anticipate you intend to buy because of the silver trade, shifting the quotes to pick up extra profit assuming you are a buyer. When you sell the gold, you just got a higher bid, you are out of the position, and he is scrambling to cover with other brokers. If you hit all the brokers the same way at precisely the same time, they are all now short, and are trapped trying to get out selling back gold that they just bought from you trying to play you for the fool.
I'd also be hard-pressed if I didn't share Martin Armstrong's very astute perspectives on market pegs: "Keeping It Real – WHY THERE CAN BE NO PEG OR STANDARD":
WHY do all PEGS and STANDARDS simply collapse? Aside from trying to eliminate the business cycle, why communism also failed, it encourages speculation. PEGS are the greatest gift to traders in history – the illusive and fabled GUARANTEED TRADE. It is like going to the casino and you bet 100,000 on number 23 at roulette. If you win, you get your 35 to 1 return. If you lose, the house returns your 100,000. It is a no loss game.
I'll also again recommend reading "Reminiscences Of A Stock Operator" (click for a PDF copy I found online that you can check out for FREE), simply a "must-read" for anyone involved in navigating the markets. I must have re-read the book a dozen times over the years. Every time I read it, I find something new that resonates for me as my own experience accumulates over the years.
Oh the Irony...
Remember back in March when the S.E.C. Rejects Winklevoss Brothers’ Bid to Create Bitcoin E.T.F.? They wouldn't want to allow people to trade some crazy highly volatile "fake currency", currently trading at $1300 USD!
The commission said it was rejecting the Winklevoss Bitcoin Trust because the markets where Bitcoin are currently traded are largely unregulated.
The lack of such regulation, the commission said, raised “concerns about the potential for fraudulent or manipulative acts and practices in this market.”
On the flip-side, now in December with BitCoin over $16,000 USD, we have CME and CBOE wanting to start trading BitCoin contracts! Even Nasdaq now wants to get into the "futures" trading game, starting off with... you guessed it, BITCOIN! You just can't make this crap up! lol
Link: Why Nasdaq, CME, CBOE all want in on bitcoin futures
For all those claiming that crypto-currencies are not "real", the truth remains that crypto currency is really not that different than the fiat currency coveted by so many.
As Martin Armstrong so astutely explains in his article, "Money versus Fiat": "A currency is backed by the productive capacity of its people like a share in a corporation."
In another article "Money: What Is It? What is Interest? What is the Wealth of a Nation?", he further explains the true nature of "currency" and "money":
Money is the OPPOSITE of assets and has always been historically. This is incredible important to understand far more than you may realize. If you want money to retain its purchasing power/value, you are creating a false image of how the economy functions.
When the purchasing power of money declines and assets rise, we call this a BULL MARKET. When the purchasing power of money rise and assets fall, we call this a BEAR MARKET. .. I have written many times that there is no magic level in interest rates that will cause the stock market to fall. As a market rises (BULL MARKET), interest rate MUST rise for that is the option on money and its future purchasing power upon return.
In fact, we can even go so far to say that a BEAR market in ASSETS, is a BULL market in MONEY!
In conclusion...
Stay safe in these volatile and exciting times, my friends. Whether you choose to buy up a boatload of STEEM now at 13 cents SBD on the internal market, or convert your extra SBD to dollars at 10:1 while the going's good (if you still have any left), just try not to be too disappointed when you see SBD hit $100 US each!
That's cuz it's a great time to pound up some seriously high-quality 50%/50% posts, and collect as many SBDs as you can while this SBD raid goes on! That way, either way, you'll still come out ahead just for taking the time to write articles and build up your STEEMIT presence just as you were probably already doing!
UPDATE: And finally, it also seems that you can now select 50/50 comment payouts on STEEMIT also, so make sure you all take advantage of that as well!
As always, I appreciate your upvote, your follow and all your comments!