Check out the latest post on the SUARA SEACEN Blog by Ole Rummel:
Bitcoin is an ‘asset’ like no other, having staged a series of four bubbles…and counting. For crypto enthusiasts the reason is clear: the cryptocurrency has become an accepted asset class benefitting from both retail and institutional investor interest. But bitcoin’s price dynamics may have a more prosaic driving force: the interplay between supply and demand, i.e., basic economics.
Capped at 21 million, bitcoin’s supply is almost perfectly inelastic. Any inflow of funds into bitcoin therefore automatically results in an appreciation, as Items with inelastic supply show a greater response to demand shifts than items with elastic supply.
In addition, a fixed and limited supply drives up price volatility by encouraging hoarding and forces new buyers to outbid existing holders, which is exactly what we observe in the bitcoin market.
Click to read.
