MAY 2
Supply and Demand
More People, The Same Limit
The Signal
More people can want bitcoin. That does not mean more bitcoin can be made to satisfy them.
The Reading
Imagine finding a house you love. Then you discover that ten other families want it too. Their interest cannot create another house on that block. If several are willing to pay more, the seller can ask a higher price. Bitcoin brings that same competition to money.
At the time of writing about 450 new bitcoin enter circulation each day, or roughly 164,000 over a year. Meanwhile, buyers range from ordinary people saving part of their wages to companies investing billions.
Over one twelve-month period, Strategy, formerly MicroStrategy, and Metaplanet increased their combined holdings by approximately 221,000 bitcoin, after allowing for sales. U.S. Bitcoin funds reduced theirs by an estimated 55,000. Taken together, this group still added around 166,000 bitcoin: approximately a whole year’s new supply.
And that comparison covers only part of the market.
Beyond it are families, private businesses and other treasuries. Banks are opening access for customers. Governments also hold bitcoin, although purchases, donations and seized coins must not be mistaken for the same kind of demand.
These buyers do not simply compete for newly mined coins. They can also buy from existing owners. When buying pressure strengthens, prices may need to rise before enough owners are willing to sell. When demand weakens, prices can fall.
Here is where yesterday’s scarcity matters. More interest cannot persuade Bitcoin to issue extra coins outside its schedule. New issuance slows through the halvings, while the ultimate limit remains 21 million. The number of people wanting a share can change. The ceiling does not rise to make room.
First Principles
Price reflects what buyers will pay and sellers will accept.
More demand can increase competition for a limited supply.
Bitcoin’s issuance schedule does not expand to meet that demand.
Today’s Challenge
Think of one hour you worked today. Perhaps it meant getting up before sunrise, solving someone’s problem or coming home tired. The money you earned represents that contribution.
Now imagine saving it for twenty years. Would you choose money whose supply can expand through banking and policy decisions, or bitcoin, whose supply is capped but whose price will fluctuate? Which rules would you trust to carry that hour of your life into the future?
Tomorrow’s Signal
The Fixed Supply