Quote from: wwzsocki on September 05, 2018, 05:29:41 PM

Back to the topic.
Something bad is going on with Minexcoin because we have steady volume a bit higher from other tokens but somebody is selling constantly and the price goes down. Only in the last 2 months price spiked to 7$ and goes back to 3,5$ which is a 50% drop.

I was attracted to this project because of parking and this magic formula. As we see parking rates are constantly going down and the super algorithm doesn't work at all. I would like to hear an explanation from the team.

It seems that we have a lot of people complaining about the low price, because of unrealistic expectations.

In order to understand what's going on, let's detach ourselves emotionally for just a few minutes and analyse what's going on...

Firstly, we must understand that the parking mechanism at its current interest rates is unsustainable. Let's explain this further...

The previous, ridiculously high, interest rates (they were up to 15% a month!) was to encourage earky adoption. Which they did very successfully. But if you think about it objectively it is obvious that it could not continue long term. I'm surprised they continued as long as they did. (full disclosure, I also took advantage of them for a nice little earner).

Funds/cryoto/assets/cash can not simply be magic'ed out of think air. There was a reserve fund put aside to pay this high interest.

Those high rates served their purpose. They generated the rapid enthusiasm required to get the coin trading and liquid. Then the rates were lowered to (still high) levels. At that time the team obviously had the private Bank and visa card products nearing completion. In retrospect it was essential to lower the rates at that time and the correct decision. There is no way the reserve interest fund would have been able to cover the super high rates and cope with a surge in interest due to visa cards. The current rates can last a bit longer, but are still ridiculously high. They will have to be lowered again some time in the future because they are still far too high to sustain long term. Again, be reminded that the asset/funds required to pay the interest has to come from somewhere.

For the record, on a regular financial investment I would regard a promised return of 5% to 10% per year an adequate return on investment. 15% per year would make me very interested but cautious... It's a bit too good to be true. 20% would make me very suspicious and anything quoting a higher expected return than that I would not even entertain and dismiss.

Please can the forum take heed of this. Do not be unrealistic with your expectations.

So I fully expect the rates to be lowered to a maximum of 10% per year in the future. This is still very generous! Thankfully, some of the details mentioned by the team reveal how this will be funded. As was stated in the beginning, interest was paid from a reserve stock of coins. Fees from block chain transfers helps a little bit, but certainly will not be sufficient on their own. So how will they manage to keep paying a generous interest of 5 to 10% a year in the future? Well, it was revealed that the main mechanism for minexpay will be an ETF. This should reassure us immensely. A big concern for the future was how the team would maintain its promise of providing any parking interest at all.
(if you are not familiar with ETFs, please Google and read up on how they work and the regulatory requirements for fund managers and investors. Its a very clever idea by the team to use one of the most flexible financial investment mechanisms available with the least regulatory requirements to enable the use of global payments and provide a return at the same time to fund their project).

If you've had the patience to stick with me this far, we've explained why the interest rates were lowered and why they absolutely must be lowered again. Only if the rates are not lowered in the future will I doubt the sincerity of the project.

So now we understand that part, we can start to analyse why the price is falling so much. The short answer is some unrealistic expectations and jumping ship. The longer explanation might provide some reassurance to those of you on the fence...

When the first rate drop was announced, we very clearly had the get-rich-quick crowd drop off. That's fine, it was their strategy all along. No experienced investor seriously expected those ridiculous launch payouts to continue.

By now everyone here should be familiar with the basic forces on a market. If there are more people trying to buy something than there are selling... It drives the price up. There is more buy demand than there is availability. Conversely if there are more people trying to sell something than there are interested buyers... The price goes down. There is over-availability and little demand for it.

This glut of sell volume allowed the low-ball buy orders to start executing some of the market sells... And the price starts to dip down. This dip in price triggered the next vhigh volume of selling... Those people who base their value on their immediate portfolio. This type of investor is long term, but has no particular allegiance or interest in any single product. This is how the majority of financial investors operate across all asset classes. They have a portfolio of assets (stocks, currencies, real estate) and regard the value of the portfolio as their worth. If any member of that portfolio is losing money, sell it and buy something rising in value instead.

So now we have a bit of a snowball effect causing a rapid drop in price. This is the initial 'crash' we had around May/June. (Google the definition of a crash, while there is no single numerical definition it's usually regarded as a significant drop in value of several days). This no doubt triggered a bit more panic selling.

This is no different to any individual financial instrument crash in history. Or indeed, any market crash in history.

So now the burning question... What happens next? Well... Here is where it gets really interesting. Because of the huge volume of sell orders we have going on, the price is staying low and continuing to decline. The massive amounts of parking interest being accumulated is not helping this. Right now, we are in the month period where all of the first quarterly parkings are completing. We have some people selling the interest to claw back some money invested... And others dumping everything and jumping ship now that they got their big quarterly payout. While I regard both of these as a little bit short sighted, it's not fair to belittle then completely... It is their right to do so. What's happening in the background is some people are taking advantage of this.

Another factor influencing the low price is the small number of exchanges. The market as a whole is not yet liquid enough to cope with a large dumping of supply. This is very very obvious where daily we can see huge differences in value between our 3 or 4 exchanges. A dump on one will cause the price to drop at that exchange and for up to a few hours there can be a price difference of 5 to 10% with other exchanges! Certainly we are dealing with a fledging market.

The good news, for the brave, is that this certainly will not continue long term. Natural market forces will even this out... When we finally get to a time when the regular market mechanisms can take effect and correct things. Then, and only then, will the price climb back up.

So what are these market forces? Well... Firstly we need to wait until we are live on a few more exchanges. Right now we just don't have the liquidity. But it will come, when there are a few more exchanges which will distribute the market out a bit more. Right now, any single action on one exchange is having too big an impact.

Secondly, we must wait until the sell volume is more evenly distributed across the whole year. Starting late September the impact from the first round of quarterly parkings will have finished and there will be a small rise in price. Around late December to early Jan there will be the second round of quarterly parkings expiring and an over-supply of sell again. The price will dip. But, it won't be quite so severe as the current round. Give it another few rounds... And by summer 2019 peoples behaviour will be fragmented enough it won't all coincide in the same few short weeks.

Thirdly, the interest rates must be lowered further. I bet this is not what you want to hear... But if you read and understand what I've written you'll see it's essential to stabilise supply.

Now... This all sounds very hypothetical and know-it-all. I get that. But, very fortunately we have had a totally unforseen and unrelated incident that supports what I have written. A short time ago, livecoin made an error in the system which halted the deposit and withdrawal of MNX in to their exchange. What was the effect? The effect was, for a short time, the over supply was suspended. The low-ball market orders completed and trading continued, with good volume... And the price gently but steadily rose, as it should and always would.

As soon as livecoin resumed deposits and withdrawals a high volume of sell returned and we have the same snowball effect.

The price of minex is artificially low because of the higher volume of sell compared to buy. Maybe now you can see why the interest being lowered in the future will be a very good thing. But not a good thing on its own of course. More exchanges, more marketing to raise enthusiasm with new investors and waiting for the cyclical behaviour of monthly/quarterly parkings to become evenly distributed. Then the artificial mechanisms suppressing the price will be replaced by regular market behaviour.

What we have here is bitcoin style surge in value with inexperienced get rich quick investors... Then a crash... Then a natural market correction. Its just that we have a few more factors in play here and the market correction is some time away yet.

Finally there is one more point to mention... Please please do not be too disappointed in a few weeks when the release of the visa cards does not have any significant effect on the price. It won't. If you are hoping it will and relying on it you will be very disappointed and there will no doubt be much moaning.

The visa cards and the banking mechanism thought up to support them are a very very clever idea and I'm super excited to start using the card. But I'm under no illusion that it's going to cause a significant rise in value of minex. I've written a lot in this post already... So I'll do a second post about this part and try to explain my reasonings.