This is one question I've been asking myself a lot lately, since Steemit is adding about 2,000 new users per day, how is this going to affect the price of Steem moving forward?
We all know that Supply and Demand determines the price of any commodity. If you have 1 apple and 3 people who want it, you can charge more for the apple, but if you have 10 apples and only 2 customers, the apples aren't in demand and price of the apples will come down. This we all know is economics 101, but Steem is a little bit different.
Steemit is currently adding about 2,000 new users per day and after HF 20 we're probably going to see that increase by quite a bit. So the demand for Steem is definitely increasing. But the biggest effect this will have in the short term is with the rewards pool. There is roughly 48,029 Steem added to the reward pool every day at Steem's current 9.5% inflation rate. That's the set amount of new Steem rewards added daily that goes towards author and curation rewards. With more and more users entering the community, everyones piece of that 48,029 new Steem becomes a little smaller. But that's a good thing. I know you're probably saying that's crazy talk, how can that be a good thing if I make a little bit less Steem every day. That's where we look at the big picture and Supply and Demand comes into play.
So we know we have about 2,000 new users per day joining Steemit. In the week after HF 19 we saw a 42% increase in the number of posts from the previous week. A lot of new users are coming in. imagine a very large portion of these users aren't actually buying Steem, they're simply setting up free accounts. So they're not actually affecting the market price of Steem that much at all. There creating more demand for Steem in the daily rewards pool, but not creating a lot more demand for Steem on the exchanges, in the market place. This fact alone is why I feel Steem is undervalued right now, but I'll get to that in a second.
Here's the current breakdown of Steem held in Steem Power by whales, dolphins and minnows. As time goes on, I expect to see an uptick in the Steem Power held by dolphins and minnows. It won't be much, the whales are called whales for a reason as they presently control 70.84% of Steem in Steem power, but we should see a small increase as new users continue to flood into Steemit.
With whales powering down, they are still supplying a steady flow of liquidity to the market without sufficient demand on the buying side to push the price substantially higher. As more and more users keep joining Steemit, the number of members who will purchase Steem and hold it in Steem Power will keep increasing.
I also could include traders here, but the volume is so low on a daily basis now with Steem, I don't see them as being of significance for the purpose of this discussion.
Steem is in essence flowing from the weak hands to the strong hands little by little. The users who understand just how powerful holding Steem in Steem Power is, there's no way they're selling. And this is becoming more obvious every single day.
So the amount of users is increasing by 2,000 per day diluting the daily reward pool of 42,029 Steem. The demand for Steem rewards is rising every day, but it's a fixed reward pool that will go down by 0.5% per year in Steem rewarded. What's the only way to fix this? Supply and Demand. The price of Steem must increase to simply keep pace with daily reward payouts.
More and more users are holding their Steem in Steem Power b/c of the increase in influence and they're long term investors, resulting in less Steem being available on the market. These are also the members who will be buying Steem in the marketplace to power up and hold long term. Supply and Demand again. As these members increase due to the massive inflow of new users, the whales numbers do not. It's still the same amount of whales selling into the marketplace, but as time goes on, the increased number of long term holders keep increasing gobbling up the available Steem.
Steem is different in the fact that there's 2 separate Supply & Demand markets, Steem daily rewards demand and actual Steem token demand. I feel we'll see the first effects of this in the daily rewards pool as all of our payouts in Steem will decrease initially b/c there's so many more users competing for the same daily rewarded Steem. This will eventually trickle over and affect the market price of Steem, which will push it higher. So in the future a post that would have netted us say, 10 Steem, will now only be worth 0.5 Steem, but since the Steem price is much higher, the fiat USD amount will technically be the same.
It doesn't matter how great your product is, if nobody uses it, it doesn't have much value. With Steemit, we have a scenario where we're just getting started and we have so many users that want to join, they're having to wait for a week or two to be able to do so. We only have so many apples to sell and a lot of people who want them, the old lesson of Supply & Demand in my opinion bodes very well for Steemit and Steem in the future. All that's required is a little patience. Have a great day!
(Disclaimer: This is by no means to be used as financial advice. I am an amateur investor and these views are my opinions only.)
Useful Websites for Steemit Newcomers
https://steemd.com
https://Steemnow.com
https://steemdollar.com
https://steemwhales.com