The Top Coins > Blog > Cryptocurrency Education > Analysis & Data > What Happens when Bitcoin Supply Cannot Meet the Demand?
                                             What Happens when Bitcoin Supply Cannot Meet the Demand?
                                                                                      What Happens when Bitcoin Supply Cannot Meet the Demand?

What Happens when Bitcoin Supply Cannot Meet the Demand?

21 Dec 2020

We are currently in the middle of the most profitable bull market in the history of cryptocurrency and the demand for Bitcoin is growing every day, but what about the supply?

What is the main difference between Bitcoin and regular currency?

The main difference would be its finite supply as there can only ever be 21 million Bitcoins in existence. After that number is reached, no more will ever be created. In contrast, you can print as much money as you like, but this will cause the overall value of that currency to decrease.

Preston Pysh made an interesting point in a recent interview with Swan Bitcoin where he outlined a scenario where even the most uninformed financial student would ask. "They can't just keep printing money like this, right?" The answer is no, if they keep printing money like they are, it will have severe consequences down the line.

When the supply of money gets too low, they simply print more, but what about Bitcoin?

Unlike regular currency, we cannot simply make more Bitcoins, and this is starting to become an issue. The number of Bitcoins being put on exchanges is slowly decreasing (11 per hour). While the amount of coins that are being scooped off of exchanges is dramatically increasing (214 per hour)

How is this possible?

A common misconception about exchanges is that you sell directly to another person, while this is somewhat true, you're actually selling your coins to the exchange who then sells it to someone else. Exchanges get money from the fees they charge for both transfers and trades, and they use those funds to purchase their own coins and hold them. Each exchange has its own supply of coins that they can sell themselves, and in the event that supply goes down, they can sell their own stock to keep it flowing.

As the demand continues to increase, exchanges are having to dip into their own supply to meet this demand. Right now, exchanges are experiencing a 4 year low of supply, and it will not be long until they entirely run out.

What happens after this?

This is when things will start to get really crazy as the price of Bitcoin could explode. Anyone holding Bitcoin could see unprecedented demand and will be given insane offers to sell. All of this equates to the current bull market we are in right now, and according to Bitcoin experts; this could go on until late 2022.

Do not forget that in 2024, the next halving event will happen which will lower the available supply even more.

Expect Bitcoins price to continue to rise over the next year and surpass its highest very soon. 

To keep track of Bitcoin or any other cryptos price, you can use our crypto tracker where we keep track all cryptocurrencies on the market.

Ronnie A. Rahman

Written by Ronnie A. Rahman
on 21 Dec 2020

Leave a Reply

Add comment

Latest Post
Related Posts