There is way way too much dumb money floating around the cryptosphere for Steem Backed Dollars to get back to $1. This stupidity is contagious. It even makes smart money willing to invest in SBDs when SBDs are higher than $1. Smart money starts to make predictions about what dumb money will do, and before you know it SBDs can never hit $1 again. The closer SBD gets to $1 the less risky it is to stockpile it.
Imagine if SBD actually did get back to $1. Anyone could look at that and come to the obvious conclusion that investing in SBD is a ZERO RISK investment. Maybe it says at $1... but also maybe it gets pumped to the sky again by dumb money. Another pump of dumb money is highly probable, so I'm sure a lot of investors see $1.70 SBD as a steal deal even though it's technically 70% overpriced.
We all saw SBDs get pumped to $13 last Christmas. Merry Christmas Steem! This made everyone's payouts huge. It also changed the way everyone viewed an asset that was supposed to hover around a dollar. We realized that only the bottom end is truly pegged (albeit loosely).
The vast amount of dumb money in the cryptosphere is totally understandable. Cryptocurrency is complicated AF. There are way more people out there willing to invest than there are willing to do the research. In the long run, fundamental research of the technology is key, but in the short term, everything is connected and gets pumped alongside everything else.
It's the Wild West out here. There is going to be dumb money floating around for a long time (if not forever). Think about how much technical knowledge the average person has. If they have any, it's usually in a specialized field. Most people don't know anything about global politics or how their own currency even works. Why would we expect them to figure out something even more complex like crypto?
Almost everyone here at Steemit is a crypto enthusiast. The amount of knowledge here is 1000 times greater than anything you see out in the real world when it comes to blockchain tech. It's easy to mistakenly think the the rest of the world is suddenly going to wake up when you surround yourself by people who are doing just that. Personally, I think the chances of that are extremely low in our lifetime. Everything would have to change. Stay ahead of the game and continue to Steem on, Steemians.
Return from SBD is Never Going Back to $1 to edicted's Web3 Blog
