Bitcoin's price is driven by supply and demand dynamics in a free market from "summary" of The Bitcoin Standard by Saifedean Ammous
Bitcoin's price is determined by the interplay of supply and demand in a free market. This means that the price of Bitcoin is not fixed by any central authority or government. Instead, it is determined by the buying and selling decisions of individual market participants. The supply of Bitcoin is limited by its protocol, which dictates that only 21 million Bitcoins will ever be created. This scarcity is a key factor in driving up demand for Bitcoin, as users seek to acquire a piece of this finite digital asset. As more people become interested in owning Bitcoin, the price is driven up due to the limited supply available for purchase. On the other hand, the demand for Bitcoin is influenced by a variety of factors, including economic conditions, geopolitical events, and market sentiment. In times of economic uncertainty, for example, people may turn to Bitcoin as a safe haven asset to protect their wealth from inflation or government manipulation. This increased demand can drive up the price of Bitcoin as more people seek to buy it. In a free market, prices are determined by the intersection of supply and demand curves. When the demand for Bitcoin exceeds the available supply, the price will rise as buyers compete for a limited number of coins. Conversely, when demand falls or supply increases, the price of Bitcoin will decline as sellers outnumber buyers in the market.- The price of Bitcoin is a reflection of the collective beliefs and actions of market participants. As more people recognize the value of owning a decentralized, censorship-resistant digital currency, the demand for Bitcoin is likely to increase, driving up its price in the long run. Thus, the price of Bitcoin is ultimately a result of the supply and demand dynamics in a free market environment.
