Bitcoin (BTC) investors generally overlook the inflation in BTC supply. The economic effects of this inflation can be beneficial for investment results in the cryptocurrency market.
Like any commodity, the increasing supply with inflation of assets such as Bitcoin requires more demand to maintain its value. These two factors determine the price fluctuations of a commodity. As of November 10, 2021, Bitcoin reached its all-time highest market value according to the TradingView index: $1.302 trillion.
At that time, the price of Bitcoin recorded by CoinMarketCap was at $68,789. The circulating supply was calculated to be approximately 18.927 million BTC. On November 30th, there were 19.557 million cryptocurrencies in circulation. This represents a supply inflation of 630,000 BTC (3.32%) or an annual supply inflation of approximately 1.66%. Price projections also indicate the economic effects of this inflation.
If the leading cryptocurrency reaches the highest speculative demand with a market value of $1.302 trillion, Bitcoin can trade at a proportionally lower price compared to its previous all-time high price. Taking into account the circulating supply considered when writing the article, the market value of Bitcoin would be $66,574. This implies a loss of $2,215 (3.2%) compared to the previous price in 2021.
However, this can also indicate a potential increase of 77% from the current price of $37,600. It should be understood that the same demand as in 2021 is expected. There is no guarantee that this demand will be seen again, but an increase in demand is possible in the coming years. Considering the current supply of Bitcoin, if the demand increases, a 77% price increase is projected in the future. This emphasizes the uncertainty of future demand for Bitcoin and advises investors to adopt a cautious approach.