“The credibility of Bitcoin as a store of value increases due to stabilizing demand growth”

The end result of the quantitave model for demand growth in Bitcoin

Abstract: Demand for Bitcoin has been growing wildly since its inception. At the same time, it seems to come and go. This large amounts of price booms and busts scare off large amounts of investors. The volatility seems to contradict the promise of being a store of value. This investigation attempts to explain and nuance this apparent contradiction. It connects logical explanations with quantifications for each of the different aspects of ‘demand growth’. By comparing demand growth over a 4 year timeframe with that of…


Introduction

During a so called ‘swine cycle’ of commodities, production increases when price increases. As investments in new production(mining) facilities take time to materialize, after a price crash, supply can stay on elevated levels for prolonged periods in time, depressing prices even more.

Bitcoins programmed supply enabling modelling as a dynamic system

Contrary to many other products or commodities, production of bitcoins is fixed and prescribed in the bitcoin protocol. Because of this, price dynamics doesn’t exhibit supply effects like a ‘swine cycle’. Therefore, bitcoin price dynamics might behave as a less complex human economic system in a bull run…

GeertJanCap

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