Why does the price of Bitcoin keep rising? Two words, demand.
1. Supply and demand determine prices, which is the first principle of economics.
Things that are in short supply will rise in price. The total supply of Bitcoin is limited to 21 million, which is based on the mathematical principle of Bitcoin. You can think of them as 21 million mathematical solutions. The actual number is even less, because the loss of Bitcoin caused by loss can be as high as 17%~23%.
2. On the other hand, demand is increasing.
In 2008, there was a global financial crisis (Bitcoin was born that year), and in 2020, there was a global COVID-19 pandemic. In order to stimulate economic activities and consumption, countries began to print money overtime. My most intuitive feeling is that when I go to the vegetable market to buy vegetables, the money is getting less and less. More and more investors and institutions are starting to buy a lot of Bitcoin to prevent asset depreciation. During the US presidential campaign in November 2024, Donald Trump even expressed his support for cryptocurrencies, promising to make the United States a "global crypto capital" and proposing a plan to establish a national Bitcoin reserve.
3. In addition, Bitcoin has obvious advantages in cross-border payments.
Low handling fees. Cross-border payments of traditional currencies need to go through banks or payment platforms, and the handling fees are high, usually 3% to 10% of the remittance amount, while Bitcoin payments do not need to go through intermediaries. No matter how large the amount is, the handling fee is only 1 to 5 US dollars. Fast transactions. Cross-border payments of traditional currencies take at least 1 to 2 working days. If a transit bank or public holidays are involved, it will take longer, perhaps a week. Bitcoin does not need to go through intermediaries, and can complete transactions around the world in a few minutes, and is not restricted by public holidays and has no limit on the amount. Cross-border payments of traditional currencies have a limit on the amount. For example, in China, the annual limit for individuals is 50,000 US dollars, while there is no limit on the amount of payments with Bitcoin.
Bitcoin has other advantages, such as high transparency, good security, strong anti-censorship, good liquidity, and strong confidentiality. The above advantages have led to an increasing demand for Bitcoin.
