Effects of Supply on Bitcoin's Price
The supply of an asset plays a vital role in determining its price. A scarce asset is likelier to have high prices, whereas one available in plenty will have low prices. Bitcoin's supply is generally well-publicized, as there will only ever be 21 million produced and only a specific amount created per year. Its protocol only allows new bitcoins to be rewarded at a fixed rate, and that rate is designed to slow down over time.

Therefore, Bitcoin's future supply is dwindling, which adds to demand. This is similar to a reduction in corn supply if harvests were to be reduced every four years until no more was harvested, and it was publicly advertised that it would happen—corn prices would skyrocket.

Bitcoin's scarcity due to its fixed supply cap of 21 million coins contributes significantly to its value proposition. This deflationary model, coupled with increasing demand, has historically driven up the price of Bitcoin. Understanding the relationship between supply and price dynamics is crucial for investors seeking to navigate the cryptocurrency market effectively.