Participants in the Bitcoin market can be roughly divided into: tokenists, miners, and speculators. Of course, a person may have a composite identity, such as token holders, miners, and speculators at the same time.
Coin collectors are buyers. This kind of people generally only buy and not sell, or rarely conduct transactions; miners are sellers, they participate in mining and sell bitcoins, and some people collect coins while others mining the coins, and some people dig only trade. As everyone knows , when there is trading demand, there will must be an exchange, and then there will be speculators.
For speculators, the cryptocurrency market fluctuates. The market will slide upwards to the side of hoarding coins, and the market will slide downwards to the side of miners. Every time the price of Bitcoin soars, a large number of new speculators will come in.
Coin collectors is the source of Bitcoin's value. If no one buys them, bitcoins will collapse immediately. Why would people want to buy coins?
We humans have a need to store value. This is also one of the basic needs that we humans are born with. We will save the things to meet the needs of the future, that is, to resist the uncertainty of the future, we will not spend all of our wealth at once. Some money will always be left, so there is a demand for stored value but the question is how do we store the remaining wealth?
The money we earn, after deducting the expenses in life, there will some money always be left over. This part of the surplus money, some people deposit it in the bank, some people deposit it in insurance accounts, and some people put it in the stock market and wait for it to high price, some put it into a fund, some people buy bonds, and some people buy gold to preserve its value.
Different ways of storing value may produce completely different results. For example, if we deposit money in the bank for interest, we may not be able to beat inflation, and your wealth is actually shrinking. If you use stocks to maintain your value, you may outperform inflation, but investing in the stock market is unlikely to make money for most people. The stock market has always had the method of "7 losses, 2 draws and 1 profit". In the past ten years, investing in houses has basically been a steady profit, but it is likely that the golden ten years of houses have passed.
The emergence of Bitcoin has provided us with a new store of value, which can store wealth in a string of "illusory" private key strings, which is revolutionary.
Bitcoin was born in 2009, and it has been ten years since today. Its decentralization and security have been verified. Decentralization ensures that Bitcoin will not be more issued or frozen, and its security is guaranteed. Bitcoin is not cracked. Facts have proved that our wealth can be stored in this way, and the price of Bitcoin has increased tens of thousands of times. We should be proud of understanding that the source of all value of Bitcoin is hoarding, because we ourselves are the source of all the value of Bitcoin.
Under normal circumstances, if no one is speculating, the price of Bitcoin should be a balance between hoarding coins and miners. Now 12.5 BTC new coins every ten minutes or so, the number of bitcoins generated every day is about 12.5 x 6 x 24 = 1800 BTC. Based on the current price of 37000 US dollars, 1800 bitcoins need 1800 * 37000= 66600 per day. More than Ten thousand dollars of investment can maintain the price of Bitcoin at $37000. If there are 1 million token holders in the world, on average, each token holder only needs to invest $70 a day.
If the halving starts now, and 1,800 bitcoins were produced a day before, and now only 900 bitcoins are produced per day, according to the supply and demand relationship, the money invested by the tokenist per day remains unchanged, then the price will definitely rise.
We considered the output of Bitcoin above, but what about the sell-off the stock of Bitcoin?
The official data shows that only 8.3% of the coins have a currency age of less than one month, that is, more than 91% of the coins have not been moved for more than one month, and more than 70% of the coins have not been moved for more than half a year. In fact, everyone is hoarding. Overall, there are relatively few sell-offs. When the total amount is limited, the circulation of Bitcoin will only become less and less.
Why is it that every time production is halved bitcoin goes up not just double, but many times? In order to clarify this problem, we need to understand the supply and demand relationship of Bitcoin.
First of all, the supply of Bitcoin is fixed, that is, there are only 21 million. For any physical commodity, the higher the cost, the greater the supply. There will be more demand, so the supply will increase, and the increased supply will curb the surge in commodities.
There is a term in economics called the price elasticity of supply, understand this:
Supply price elasticity refers to the degree of response to changes in the supply quantity relative to price changes, that is, when the price of a certain commodity increases or decreases by one percent, the supply quantity of the commodity increases or decreases as a percentage.
Bitcoin's supply price elasticity is zero, no matter how the price rises, the supply will always remain the same.
Second, the demand for Bitcoin is more perverted. For any physical commodity, the higher the price, the smaller the demand. This is not difficult to understand. When the price is high, people will look for alternatives. For example, you eat meat every day. If the price of meat goes up, you may It will reduce the frequency of eating meat, or replace it with other foods. Generally, as the price of meat rises, your demand for meat becomes smaller.
The price elasticity of demand for Bitcoin is actually negative, which means that the higher the price of the currency, the stronger the demand. Because the larger the plate, the more suitable for storing value. Coupled with every halving of production, people expect Bitcoin to skyrocket, so the speculation army rushes in, adding to the flames, and the price will inevitably skyrocket.
The reverse is also true. If there are too many bubbles in the price of Bitcoin, and the selling pressure of miners or other currency holders exceeds the input of the currency, the price of the currency will fall. Once the downward trend is formed, the demand will decrease, resulting in the currency price fell further.
So, this is the basic price model of Bitcoin.