Today will be a different type of price prediction for you guys. This is largely due to the fact that there is a great exodus occurring within the community of the project that I am about to discuss which means that the prediction in this article could actually go in either direction. The prediction could either come true or completely head in the opposite direction towards disaster for the cryptocurrency.
The project I will be covering today is STEEM and its biggest dApp, SteemIt.
Firstly, let us take a look at the performance of STEEM (STEEM) below from January 2019 until today;
STEEM/USD - January 2019 to May 2020
Taking a look at the chart for STEEM above, we can see that the cryptocurrency started 2019 off in the right direction as it surged by over 100% to reach the high of around $0.55 in March 2019. However, the tide shifted for the coin from here onward as the cryptocurrency went on to drop throughout the rest of the year to close at a price of around $0.11.
In 2020, we can see that STEEM was surging in the first 2 months of the year as it managed to climb toward the $0.30 level. However, as soon as the announcement was made of a potential takeover, the coin started to drop slightly.
As of mid-May 2020, the coin has started to push higher as it trades at around $0.213.
SteemIt was known as the most prominent decentralized social media dApp built with the power of blockchain technology. The content and posts on SteemIt were tied to the STEEM blockchain which made them immutable - allowing them to exist forever.
The fact that blockchain technology was involved also meant that the posts of SteemIt were censorship-resistant and could only be governed by the community of STEEM itself.
However, the sentiment is very shaky right now within the STEEM community. There was a hostile takeover of the project as a prominent cryptocurrency investor inked a deal to buy the largest dApp on the network - SteemIt. Read this article further to find out who this investor was.
This took the SteemIt community by surprise as they voiced their concern about the future direction of the project and if it could even be classified as ‘decentralized’ anymore.
After a month-long battle for democracy, a sector of the STEEM community decided to leave to create their own, stand-alone, blockchain project. A blockchain that was built for the community and not in the hands of any investor that decided to just enter the community.
Due to the uncertainty regarding the future of STEEM, this prediction could go in either two directions.
For the reasons stated above, and more discussed below, I believe that STEEM has the potential to surge by a total of 250% from the current trading price ($0.21) to reach my 2020 price prediction of $0.75 OR it could just collapse and head as close to $0.00 as possible.
In this article, I’ll firstly cover a range of topics that I believe will influence STEEM in reaching either target during 2020 and then analyze STEEM on the daily chart to highlight some areas of resistance on the way toward the target.
What Is Steem?
Steem was the first blockchain project that wanted to create a completely decentralized social media platform that was intended to be censorship-resistance and fully owned by the community. It was designed to be an outlet where users could post whatever they wanted in the battle to keep free speech alive!
Starting in 2014, Dan Larimer and Ned Scott co-founded Steem with the idea to create a platform in which users could freely post whatever they liked without the risk of being censored. It was pretty much going to be a hybrid version of Reddit and Medium, but all of the posts and metadata would be stored on the Steem blockchain where they were immutable and would be stored there forever.
The blockchain went live in 2016, giving birth to the social media platform which they called Steemit. Steemit is a dApp that runs on top of the Steem blockchain itself and provides the interface for users to come and post content. Other users would be able to tip the content if they liked it and comments made by users could also be tipped - meaning everybody can earn through this social media platform.
Unfortunately, Dan Larimer stepped down from the Steem team in 2017 and went on to create EOS, however, Steem still went on to thrive as Steemit users continued to grow.
I will stop explaining what Steem is here because I am sure the majority of you already know what it is. However, to find out more about Steem, Steemit, and the underlying ecosystem behind the whole project, take a look at this article.
Dark Clouds, Hostile Take Overs and Hard Forks
So, where did it all fall apart?
Well, it all starts with the very enigmatic and highly overt marketer, Justin Sun.
Sun is the founder of the Tron blockchain and he has long been known to host high profile publicity stunts to get his project into the limelight. A prodigy of Jack Ma, CEO of AliBaba, Sun does have accolades that prop him up(such as his Forbes Top 30 Entrepreneurs under 30 listing), however, many of his actions lead many people to believe that he is more of a marketer than an innovator.
The controversy can be traced back to Valentine’s Day when a press release was announced that Justin Sun had effectively bought the SteemIt dApps from Ned Scott.
You would think that SteemIt being acquired by a prominent cryptocurrency entrepreneur would result in a positive response from the overall STEEM community, however, the exact opposite happened as dark clouds started to appear above the future of the Steem network.
You see, Steem was built on the grounds of decentralization. This means that no single entity should have control over the blockchain and the content that is posted on the SteemIt platform.
When the announcement was made, many Steem users had concerns about what Justin Sun’s intentions really were.
This was especially so when he revealed that SteemIt would be migrating over to Tron and everything would be run from the Tron blockchain itself. As a result of this, all of the dApps already created on Steem were confused about what would happen to the future of their community-driven projects in the hands of Justin Sun - especially if they migrated over to the Tron network.
Perhaps the biggest concern that the Steem community was regarding the ninja-mine that Sun also acquired during his takeover.
When Decentralized Governance Becomes A Problem
You see, Steem was always intended to be fully decentralized, in the hands of the community. Community members would vote on blockchain proposals to decide the direction of the project. However, there was a ninja-mine for STEEM and around 20% of the circulation was within the hands of the SteemIt developers.
Luckily, Ned Scott had assured the community that this ninja-mine was strictly for development proceedings and the 20% stake would never be used to make governmental decision votes.
Well, when Sun took over, the community was not so sure that Sun would stick to this social contract that Ned Scott had put in place. They trusted Ned, they did not trust Sun. Can you blame them?
In a fight to retain control of their community governance, the Steem community voted for a soft fork to freeze all of the pre-mine ninja funds from being able to take place in the voting of proposal decisions - effectively rendering Justin Sun’s 20%, around $12 million worth, of STEEM coins being useless in governance matters.
As you can imagine, Justin Sun was not happy at all!
Sun Calls On Exchanges To Fight For Him
In retaliation, Sun called upon some of the largest exchanges in the cryptocurrency industry to help fight against the ‘malicious hackers’ trying to take over the Steem network. Considering that exchanges hold a large number of different cryptocurrencies, they often are in control of the voting rights of these coins whilst they remain in the exchange wallets.
Sun enlisted Huobi, Binance, and Poloniex to outmaneuver the ‘attackers’ and use their large voting power to get them out of their positions as community-elected representatives.
Sun actually tweeted that he had ‘defeated the hackers’ and claimed that the Steem Network was now stronger than ever.
He was very wrong.
This ‘power move’ left the community disgusted. It gave birth to the hashtag #SteemHostileTakeover on Twitter as Sun and the exchanges came under fire for using user-owned coins (in the form of deposits) for making political decisions on a particular blockchain.
As you can imagine, the exchanges had to act quickly to preserve their integrity and save their own asses.
The exchanges that help to facilitate this coup started to withdraw their support for Justin Sun.
Changpeng Zhai, CEO of Binance, stated that they had removed the votes made by Binance on March 3rd, 2020 claiming ‘miscommunication’ as the reason as to why they voted, believing they were voting for a regular upgrade.
Huobi followed Binance and removed their votes stating that they were misled with information causing them to believe they were helping to ‘save’ the Steem blockchain from a hostile take over. You can read their response in this blog post.
You see, Justin Sun failed to realize that SteemIt was actually a community and no ‘voting war’ would ever outmaneuver the community. John McAfee put it best in the following Tweet;
Well, at the end of all of this, some people were pretty disheartened by the actions of Justin Sun, sparking calls for a hard fork.
The Birth Of Hive
Dan Notestein, known as Blocktrades, one of the most prominent ‘witnesses’ (community appointed delegate) from the Steem network had posted the following blog post in which he states that he will not be co-operating with Justin Sun - no matter the cost.
In the post, he goes on to state that SteemIt Inc pretty much has zero value now and suggested that the community should fork into their own blockchain to move past this entire scenario.
This gave birth to Hive.
The Hive blockchain was launched on March 20th, 2020. After a month of battling the undemocratic take over from Justin Sun, some members of the Steem community just decided to fork the blockchain and create their own stand-alone chain - with all of the content and posts from Steem being migrated.
You can think of this as a mass exodus because the majority of SteemIt users seemed to agree that this was the best solution and have started the migration process.
All STEEM owners were able to swap their tokens for HIVE tokens on a 1:1 basis. All except for Justin Sun and his cronies.
The developers of Hive decided to blacklist the SteemIt stake (the ninja pre-mine coins) and those who actively supported and contributed to the takeover orchestrated by Justin Sun. They compiled a huge list of suspected supporters and banned them all from being able to migrate their tokens to the new blockchain.
You might be wondering how the hell all of this is possible?
Well, you need to remember that the value of Steem Network was derived from the dApp ecosystem and its community. If you alienate these users, they will look for a solution. Hive is their solution.
A large proportion of dApps have already started the migration process with dApps like Peakd (pretty much the new SteemIt) and 3Speak (a video and media platform where content is linked to the Hive blockchain) are leading the way.
What Does All Of This Mean For Steam?
Well, SteamIt is desperately trying to hold on to its userbase as they start to censor any content on their platform that is relating to Hive. They are using their ninja pre-mined coins to downvote any users that suggest migrating over to the new Hive ecosystem.
As the dApp developers have all started to leave the ecosystem, this pretty much means that Steem could potentially be dead. However, with a marketer like Justin Sunn at the helm, it would not be surprising to see if he has some more tricks up his sleeve to orchestrate one last pump before his exit.
Only time will tell what will really happen to STEEM.
Steem (STEEM) Price Analysis
LONG TERM - DAILY CHART
What Has Been Going On?
Taking a look at the daily chart above, we can see that STEEM dropped by a total of around 77% throughout the second half of 2019 as the cryptocurrency closed the year at a price of $0.11.
During 2020, we can see that STEEM was rallying in the first 2 months as the cryptocurrency went on to reach a high of around $0.3. The coin had run into resistance at a long term bearish .382 Fibonacci Retracement level priced at $0.276 and it was never able to travel much further higher above this resistance.
This bearish Fibonacci Retracement was measured from the 2019 high to the 2019 low.
Interestingly, the day that STEEM rolled over was the same date (February 14th) that the Justin Sun takeover of SteemIt was announced. After the announcement, we can see that STEEM went on to fall during the following weeks.
During the March market collapse caused by the Covid-19 pandemic, STEEM collapsed back into the 2019 lows at around $0.11.
We can see a huge price pump for the cryptocurrency during March 18-19, this was actually due to the fact that STEEM was forking into Hive. It seems that people were planning on picking up some STEEM at cheap prices to take advantage and receive some HIVE coins during the token swap. This caused the price for the cryptocurrency to surge as high as $0.40.
The cryptocurrency has since dropped back into the $0.15 level.
Are We Bullish Or Bearish (as of May 2020)?
AS of May 2020, we are currently trading within a neutral market condition. The cryptocurrency did recently break back above the bearish .236 Fib Retracement at $0.21 as it pushes higher, however, it still would have to close above the $0.30 to start a short term bullish run. A close beneath $0.115 would put STEEM into a bearish trading condition.
Where Is The Support On The Way Down TO $0.00?
Remember, I said this could go in either direction. If this latest migration results in SteemIt being rendered obsolete, we can expect STEEM to dump.
In this case, the first level of support is expected at $0.2. Beneath this, support can be found at $0.15 (200 MVA), $0.146 (April lows), and $0.114 (downside 1.272 Fib Extension). Beneath this, support is located at $0.10, $0.09, $0.08, and $0.065 (downside 1.618 Fibonacci Extension).
If STEEM does drop beneath this critical support, it is likely to collapse into the abyss.
Where Is The Resistance On The Way Up TO $0.75?
On the other hand, if the buyers regroup and start to push higher, the first level of resistance is located at $0.25. Above this, resistance can be found at $0.276, (bearish .382 Fib Retracement), $0.3, $0.33 (bearish .5 Fib Retracement), and $0.384 (bearish .618 Fib Retracement).
If the buying pressure causes STEEM to continue further above $0.4, resistance is located at $).46 (bearish .786 Fib Retracement), $0.487 (1.272 Fib Extension), $0.50 (bearish .886 Fib Retracement), and $0.528 (1.414 Fib Extension).
This is followed by additional resistance at $0.55, $0.58 (1.618 Fib Extension), $0.6, and $0.61 (long term bearish .5 Fib Retracement measured from September 2018 high to 2019 lows).
Before being able to test my target at $0.75, STEEM would have to push higher and break the resistance at $0.666, $0.70, and $0.738 (long term bearish .618 Fib Retracement)
STEEM has literally been to hell and it still has yet to come back. Only time will tell if Justin Sun can salvage some form of community within SteemIt and save STEEM from dropping into the abyss.
The events that occurred over the past month happened very quickly, however, it is highlighted one important feature about decentralized cryptocurrencies - you cannot buy their communities.
After alienating the entire STEEM community it will literally be a mountain to climb to bring STEEM back into trust within the cryptocurrency world.
For these reasons, this price prediction is a little different from every other prediction I have written as it could go in either direction.
A break beneath $0.10 would certainly send STEEM spiraling down toward $0.065 (and probably lower). On the other hand, if some bullish presence can return, Sun might be able to bring STEEM as high as $0.75 before he decides to call it quits and grab any form of return on his investment.