Bitcoin's predicated finite issuance stands as a notable drawback.
In the same article written by Giedre Valaviciute, they mentioned that Bitcoin's value doesn't rely on fundamentals but on supply and demand, as recently highlighted in a column aimed at explaining its skyrocketing worth.
An anonymous investor who made millions off Bitcoin was quoted in Valaviciute's piece, explaining his investment by stating, "It's the only commodity in history that doesn't have a supply response to rising prices."
These sentiments echo common viewpoints among Bitcoin owners or those attempting to explain its enigma. However, they contradict Bitcoin's price history. Although Bitcoin is currently experiencing record highs, it has also endured numerous bear markets.
This leads to further conundrums. According to Valaviciute, Bitcoin doesn't rely on fundamentals. However, if that's the case, owning Bitcoin amounts to nothing more than a speculation. What exactly do Bitcoin owners think they own?
Certainly, some will continue to argue that they possess a commodity with a finite supply, implying that its value can only increase. But in that case, what is it that they genuinely own? Ponder upon it. And in considering this, it must be mentioned with certainty that those fortunate enough to own Bitcoin (and undoubtedly, many feel this way) do not own actual money or a coin. A coin's worth lies in what it can purchase, but Bitcoin owners would not use it as such.
Support for this notion can be found in the belief held by Bitcoin owners and analysts that Bitcoin does not trade on fundamentals, rather on supply and demand, resulting in its consistent appreciation in value. But if its value is only going up, then it is not money. Truly, who would exchange a monetary medium for fiat money, market goods, or both, knowing that it will soon be worth significantly more than when used for such a transaction?
To which some might retort that demand for a finite commodity may not remain constant, resulting in Bitcoin bear markets. Agreed, but isn't the whole point of Bitcoin that it is not governed by fundamentals but by supply and demand? Therefore, what are the "non-fundamentals" that would attribute to Bitcoin's decline in value? And if a commodity that doesn't trade on fundamentals experiences a decline, who would exchange money, market goods, or both for something that is depreciating at a rapid or slow pace?
This brings to mind the aforementioned investor, who amassed millions through Bitcoin, and his statement that Bitcoin is "the only commodity in history that doesn't have a supply response to rising prices." Yes, this is true. But is there a supply response to falling prices? One could speculate that falling prices might draw in sellers, but in fairness, falling prices would likely entice some buyers eager to acquire what is in short supply at a lower cost.
However, the question remains unanswered: what exactly are buyers receiving if they purchase at falling prices? Without fundamentals in play, and with its limited supply considered the source of Bitcoin owners' perceived insurance against price declines (have you heard that claim before?), it seems that buyers and owners are just engaged in a speculation based on zero substance, which, if successful, will remain a speculation that a finite commodity will always have buyers.
Ultimately, it can be said that while investors live and let live, many would have been better off if they had purchased Bitcoin during a bear market or both.
Still, it's worth noting that fundamentals are still at play with Bitcoin, but they stem from the hope that there will always be a market for a finite commodity, and that being finite, it can never satisfy the purpose of money; money being worth what it commands in the marketplace. The problem is that Bitcoin is not money, and we know this because its owners tell us so.
John Tamny, a prominent columnist, has also expressed his views on Bitcoin, aligning with the belief that its value is mainly driven by supply and demand, not fundamentals. Tamny, in one of his articles, argued that Bitcoin represents a unique commodity, with John Doe, the anonymous investor who made millions from Bitcoin, supporting this view by stating that Bitcoin is "the only commodity in history that doesn't have a supply response to rising prices."
