Investors understand the importance of high demand and low supply.

When dealing with a cryptocurrency with a finite supply, the price surge is almost always guaranteed. Purchasing a cryptocurrency with a fixed/limited supply is an effective way to profit from the future value.

Banking on fixed supply: What it means to investors Bitcoin Halving is known as the event where new Bitcoins entering circulation as block rewards are cut in half. The reward for mining Bitcoin is reduced by 50 percent every four years. There is a strong relationship between the current value and the circulating supply of a cryptocurrency.īitcoin is by far the world’s largest cryptocurrency by market cap, with a fixed maximum supply of 21 million. Relationship between the current value and circulating supply Total supply is the number of coins currently mined (including the missing ones that are no longer in circulation or lost).Ĭirculation supply refers to the total number of coins in circulation. Three essential terms relate to supply:įixed (or maximum) supply is the total number of coins that can ever be in circulation. The supply of a particular cryptocurrency refers to the total number of coins in circulation. So, the question arises: Why are people investing in cryptocurrencies with a fixed/limited supply? Understanding what ‘supply’ means Most cryptocurrencies follow a demand and supply principle that determines their growth. Other tokens, like Ethereum, have a constant flow of new assets added to the ecosystem, which makes them inflationary. As a result, not more than 21 million Bitcoins can ever be mined or be in circulation at any given moment. In other words, it is deflationary by nature. The Bitcoin supply is limited to 21 million.

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