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<h1>Starting Thoughts on the Price Trend</h1>

Many have been noting the price drop recently and chalked it up mostly to whales cashing out. I think there is some truth to this but only because our market and order books are in their infancy. We don’t possess the massive bid and ask walls coins like bitcoin so it is easy for a single heavy seller to temporarily crash the market. In my opinion this is a large reason we have been seeing a continuous downtrend in the short term, but over time this will change. As our market becomes more robust and as we add users, more buyers and speculator will fill up order books. That being said I don’t believe we will be seeing large dumps long term and that is because of basic principles in economic game theory.

<h2>Game Theory</h2>

If you are unfamiliar with game theory, it is a way that economists try to model and analyze how people or businesses strategize and act in a competitive market situation. Game theory is not purely economics however, as it also borrows many concepts from psychology that can be used to give a better representation of what certain actors are thinking about when they make certain decisions. Game theory is also not strictly used for businesses in a competitive market, but can be used to analyze many situations from whether or not a country should go to war, to whether or not you should take a plea deal if you are facing prosecution. However game theory has many main principles it follows to justify how people act and there is one in particular I want to focus on today, which is actors in a competitive market will sacrifice possible short term gains for longer small term gains  if the short term gains come with possible systematic risk.

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<h3> “Shear the Sheep Don’t Skin It” </h3>

If the principle of is actors in a competitive market sacrificing possible short term gains for longer small term gains  if the short term gains come with possible systematic risk, is confusing I will put it in simple terms for you to understand. Above I have a quote “Shear the sheep don’t skin it” which encompasses this principle pretty well. The idea is if you are a shepherd that owns one sheep, skinning it and butchering it and selling its byproducts may net you 50 dollars one time in the short term, but you no longer have a sheep or a business. On the other hand you could shear the sheep every two weeks and make 20 dollars each time for a period of a year until the sheep dies. What is the smarter decision? Obviously shearing the sheep and getting profit over a period of time rather than all at once is the better decision. Big actors in a market understand these principles and act accordingly because in a competitive market, making the most profitable decision is key.
 If you still are having trouble I’ll give one more example that we have seen many time in history regarding kings and how they chose to tax. Everyone hates taxes but it has always come down to HOW much you hate taxes. In medieval times, tax too little and you didn’t have enough to support your kingdom, tax too much and you faced an uprising. This is the same idea as before. In the short term a king could raise the taxes to 80% but eventually the citizens will start an uprising and overthrow the king, but tax them 30% in the long term and they just complain and continue on with their daily lives. The key here is to make the most amount of money without having systematic risk which would shut the entire profit stream down. 

>“In levying taxes and shearing sheep it is well to stop when you get down to the skin”. - Austin Omalley

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<h4>How Game Theory Relates to Whales on Steemit</h4>

Whales on Steemit are no different than the businesses and people in the examples I provided above, like all of us they seek to make the most amount of profit and dumping all at once is not how it is done. If we look at the payouts we can see that whales are cashing out some but not all of their Steem Power because in the long term, making sure the system survives and thrives is a much more profitable outcome. So when the price falls to a certain point, whales will start to cash out less or stop cashing out at all if it jeopardizes the market as a whole. Maybe of the whales who own a million dollars or more in Steem power see the greater picture that, with a more mature market their shares could be worth 10 times that. Much like mining in bitcoin (shout out to @alexgr for the comparison) it is more profitable for miners to not collude and fork the code, but rather follow the decisions of the masses because essentially they would be killing the golden goose if they did. Not just whales, but the developers and all users in general are all trying to make as much profit as they can so they will take the long term choice over the short term choice if given the two. 

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I think we will most likely still see a price drop in the near future just because of how fast the price rose in a few weeks, we have to correct back to a market equilibrium and then continue to move up from there. I have faith though that, with the amount of new users, posts and developments coming to the Steemit platform that we will soon begin to grow again.

-Calaber24p