Little explainer about Bitcoin price

a) When #Bitcoin investment stagnates, its price goes down.

b) When BTC price stagnates, investment is actually growing.

The number of bitcoins is capped at 21 million coins in total, but currently not all coins are in circulation. Every new block created on the Blockchain releases new minted coins. This happens approximately every 10 minutes, since the creation of the network in 2009.

This mechanism is there to help new adoption as the network is growing. It was designed to decrease the subsidy gradually to encourage early adopters to participate, and slow down as price increases. Currently, 6.25 BTC are created and put into circulation every block.

This means the total supply increases by approximately 900 new coins every day.

6.25 * 6 * 24 = 900

At current price of ~$30,000, that means $27,000,000 of new fresh value is dropped every day into the pool.

If the price represents the balance between supply and demand, it's a very fragile balance as supply keeps growing and demand needs to keep up, otherwise price falls.

Per month, that it $810,000,000 NEW investment that needs to enter the market for BTC price to stay STABLE.

At $40,000 per BTC, that's over $1B!

This is one of the reasons why there are corrections after sharp upwards spikes. Not only traders cashing out profits, but also more simply buyers reaching the maximum their budget.

The inflation is small and decreasing, but steady.

To keep the price between $30~40k (as it is now), there needs to be approximately a fresh new billion dollars invested in Bitcoin every month, steadily and without interruption.

When BTC price stalls boringly, its total value actually keeps growing by $1B a month!

Let this sink in.

https://twitter.com/zlok/status/1356181622538833920?s=21

N.B. Yes, slightly simplified for clarity.