Steem Backed Dollars are supposed to be a stable coin, but that hasn’t been the case for the past 7 months, when SBDs dramatically rose to $13. There has been no stability in SBDs since, and the price has slowly deflated all this time. My general strategy has been to convert my SBDs to Steem daily and power it up.
Now, that strategy is about to change.
I expect SBDs to drop below $1, but barely. Meanwhile, I expect the price of Steem dropping further and getting close to parity with SBDs again, resulting in a 1:1 ratio at some point. We’ll see whether or not that happens, but in the meantime, holding SBDs will be a little more stable than most of the tokens in this market (I don’t expect SBDs to get lower than 90 cents or so), and allow me to build up a small hoard that can be used if other tokens continue to fall in price.
Here’s why this is good: this bear market, with depreciating tokens, is demoralizing. While I’ve been content with plugging on and writing a handful of articles each week, I’ve noticed a lot of decreased activity in both my feed and my comments section. It’s less exciting to take time to do stuff on Steem when the payout is low, and lowering daily.
With SBDs getting back to $1, rewards can be built up. And if the price of Steem continues to plunge (which is much more indicative of the overall bearishness of cryptocurrency than Steem itself), we may even be able to acquire Steem for less than one SBD. I’m now saving my SBDs in anticipation of this.
There is some risk here: stable coins are not always as stable as they advertise. SBDs could drop below 90 cents, even down to 50 cents or lower, and never recover. I don’t expect this to happen, as the Witnesses can change rewards payouts to lower supply of SBDs, or offer dividends to make them act like bonds, creating upward pressure on the price as people seek even small (3-5%) rewards for holding.
What’s great about Steem is that anyone with an internet connection can start writing/producing content and not put any of their own money at risk.
Interested in optimizing your Steem experience? Do you want to learn more about the Steem blockchain and how Steemit works? Click my logo below for a deep dive on Steem: