STEEM to $10 USD? This is the wrong question to ask or even think about.

When you consider where to spend your money, you have to evaluate opportunity cost. You only have so much money to spend. The more money you spend on Option A, the less money you have left to spend on Option B.

Suppose I have $10,000 available.   Should I put this money into a real estate ETF for good dividends?  Buy precious metals in anticipation of USD collapse?  Follow Ben Stein's advice and just buy the Spiders (SPY) ? 

Or should I put my $10,000 into cryptos? 

This post isn't providing financial advice, so I won't attempt to answer these questions for your personal scenario.  The answer is complex. And different for every person. 

What is your risk tolerance? How does this $10,000 fit into your overall financial plan? Is the $10,000 play money you can afford to lose completely? Or does it represent your total life savings? How old are you? How close are you to retiring or wanting to retire? What is your family situation and how many people are dependent on you?  Etc, etc.

For sake of argument, let's assume you decided to put the $10,000 into cryptos, since you can afford to lose 100% of your gambling stake.  Stated differently, the $10,000 should be money you would have otherwise been happy using to buy lottery tickets.

Let's assume you had to make a crypto purchase decision back around Jul 19th.  And you had to choose which coin(s) to buy with your $10,000?  

You're probably guessing, correctly, that this question has some relevance to my personal situation.  I didn't invent this scenario out of thin air. Been there. Lived it. More or less.

Since this is a steemit post, let's focus the question on just two coins. 

STEEM versus BTC.

Would it have been better to put $10,000 into STEEM on July 19th?   

Or would it have been better to put $10,000 into BTC on July 19th?

The math is simple.  I'll do it for you in two lines below.

$10,000 in STEEM on July 19th, at $1.22 price point, would have purchased about 8,197 STEEM.  Cashing out today at a STEEM price of $1.11 would net approx $9,098. Resulting in a loss of more than 9%. Resulting in a loss of more than $900.

$10,000 in BTC on July 19th, at $2,372 price point would have purchased about 4.22 BTC. Cashing out today at a BTC price of $3,600 would net approx $15,177. Resulting in a gain of more than 50%. Resulting in a gain of more than $5,000.

I decided to do this analysis now, since BTC price is going through a significant retrenchment.  From a high of almost $5,000 it has recently fallen sharply into the $3,600 range, which is a drop of almost 1/3.

No one can claim that the analysis is fatally flawed because I picked a point when the BTC price was peaking, which might bias the result in favor of BTC.

Exactly the opposite. I picked a point when BTC price has just dropped by almost 1/3.   

The conclusions are stark. And incontrovertible.

As an investment vehicle, STEEM has sucked over the last two months.  

BTC appears to be far and away the better investment. Definitely the better investment over this particular analysis period,

Since May'17, when STEEM started at $1 USD, it jumped up to approx $2 USD, and has since then slowly sunk back down to approximately $1 USD.  Round trip to nowhere. The green line above meanders more or less sideways, but slowly trending down by about 9% over the analysis period.

You wouldn't have lost a lot of USD fiat money investing in STEEM.  But you would have lost some. 

In contrast, BTC price has been relatively more solid than STEEM.  Both have significant volatility, but on average BTC price is trending up. The STEEM trend is solidly sideways. At best. A fair  assessment would report that STEEM is gradually losing value against BTC on a daily and weekly basis. 

Look at the yellow line in the chart. The yellow line, relative STEEM value versus BTC is much more important than the USD fiat price of STEEM, in my opinion.

Over the most recent two month period, the relative price of STEEM versus BTC has been cut in half.

You can ask and ponder the question of whether STEEM may eventually get to $10. It might. It might not. I don't know. Truth is no one does, despite any protestations to the contrary.

But to close out by linking back to the title, asking whether STEEM gets to $10 is the wrong question.

The question you should be asking is, what will the price of BTC be when STEEM price increases by 9X and hits $10?

Will BTC price be higher or lower than $33,000, when STEEM gets to $10?

Because if you are planning on making money, or getting rich, or even retiring on your "winnings" when STEEM hits $10, you'll potentially feel a touch foolish if BTC is at $100,000 per coin at that time.  You'll have left an additional 300% gain on the table, by placing your bets on STEEM instead of picking the winner BTC.

Alternately, if BTC is only $10,000 when STEEM gets to $10, you'll look like a genius since you will have made an additional 300% by betting on STEEM vs BTC.

When STEEM gets to $10, what do you predict the price of BTC will be? $10K? $33K? $100K?  other?

If I'm still around when STEEM hits $10, I'll send one STEEM to the person who most accurately predicts in their reply below, the BTC price at the fateful moment when we see STEEM trading at $10.

Comments welcome.

STEEM On!!

DaveB

image from coinmarketcap.com