Bitcoin (BTC) reached an all-time high price of $69,045 on November 10, 2021, as well as an all-time high market cap of $1.302 trillion on the same day. Bitcoin is usually advertised as “digital gold” due to its programmed distribution and capped maximum supply of 21 million BTC – which can theoretically make it a great store of value (SoV) over the long term.
However, despite the highlighted good economic fundamentals, BTC is still affected by supply inflation while the 21 million units have not yet been fully distributed to Bitcoin miners.
Considering the data retrieved from fineball As of Sept. 5, with a supply of around 19.48 million BTC currently in circulation, one bitcoin would be worth nearly $66,838 — $2,207 (3.19%) down from its all-time high in U.S. dollars.
Bitcoin market cap all-time high on November 10, 2021. Source: TradingView
Additionally, market capitalization is typically used to gauge the market’s perception of value for a particular asset, as well as its speculative demand at any given time. This means that Bitcoin, in a practical application of the economic law of supply and demand, constantly needs increased demand to match historical prices when supply was previously lower.
Bitcoin price analysis
Meanwhile, BTC is trading at $25,747 at the time of publication, which would potentially offer Bitcoin investors an opportunity to win 160% of their purchases made at the time if the leading cryptocurrency ever met previous demand.
Bitcoin (BTC) 1 year price chart. Source: fineball
In comparison, the current price is -62.72% below the all-time high.
Bitcoin supply inflation
When Satoshi Nakamoto decided to create “Bitcoin, a peer-to-peer electronic cash system,” he had to decide how the coins in that system would be distributed. “WHO would receive it?”, “How much would be received?” And “How often would it be accepted?” were questions that needed to be answered.
The Bitcoin creator solved the mystery by mining, which at the same time should serve to protect the network through the Proof-of-Work (PoW); Mining would also reward these “workers” with the programmed distribution of coin according to the “work” that could be “proven”.
In this way, the following was determined: With every block discovered and added to the blockchain, the miner would release an uncirculated amount of BTC through a special transaction called “Coinbase”.
Satoshi Nakamoto programmed the Bitcoin protocol to halve the amount of coins released into each block via Coinbase once 210,000 blocks were mined, until it reached zero and completed distribution at nearly 21 million BTC – something expected to happen in this year will happen by 2140 if nothing is changed by then.
Interestingly, in the current “halving cycle”, where 6.25 BTC are created in each block and released every 10 minutes on average (depending on the mining difficulty adjustment), Bitcoin has a supply inflation of 900 BTC per day or 328,500 BTC per year. This equates to annual inflation of around 1.7%, which will halve by 2024.
How would other cryptocurrencies perform according to their record-breaking market caps?
Disclaimer: The content of this website should not be construed as investment advice. Investing is speculative. When you invest, your capital is at risk.
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