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 promoted as ‘digital gold’, due to having a programmed distribution and limited max supply of 21 million BTC — which can, theoretically, make it a great Store of Value (SoV) long term.
However, even with such highlighted good economic fundamentals, BTC is still affected by its supply inflation, while the 21 million units have not been fully distributed to Bitcoin Miners.
Considering data retrieved by Finbold on September 5, with a current circulating supply of around 19.48 million BTC, one Bitcoin would be worth close to $66,838 — $2,207 (3.19%) less than its price all-time high in US dollars.
Moreover, market capitalization is usually used to measure the market’s perception of value in a given asset, as well as its speculative demand in a given moment. Meaning that Bitcoin constantly needs an increased demand to meet historical prices with a previously lower supply, in a practical application of the supply and demand economic law.
Bitcoin price analysis
Meanwhile, BTC is trading at $25,747 at the time of publication, which would potentially offer the possibility for Bitcoin investors to gain 160% for purchases made at this moment if the leading cryptocurrency ever meets previous demand.
Comparatively, the current price is -62.72% lower than the all-time high price.
Bitcoin supply inflation
When Satoshi Nakamoto decided to create “Bitcoin, a peer-to-peer electronic cash system”, he had to decide how the coins would be distributed in this system. “Who would receive it?”, “How much would be received?” and “How often would it be received?” were questions that needed to be answered.
Bitcoin’s creator solved the puzzle through mining which, at the same time, would be used to keep the network safe through the Proof-of-Work (PoW); mining would also reward these “workers” with the programmed distribution of the coin, according to the “work” that could be “proved”.
In this way, it was established that: with each block discovered and added to the blockchain, the miner would release an amount in BTC, not yet in circulation, through a special transaction called ‘coinbase’.
Satoshi Nakamoto programmed the Bitcoin protocol so that the amount of coins released into each block through the coinbase was halved whenever 210,000 blocks had been mined, until it reached zero, completing the distribution at close to 21 million BTC — something expected to happen in the year of 2140, if nothing is changed until then.
Interestingly, in the current ‘halving cycle’ of 6.25 BTC being created in every block, released on average every 10 minutes (according to the mining difficulty adjustment), Bitcoin has a supply inflation of 900 BTC per day or 328,500 BTC per year. Resulting in a yearly inflation of around 1.7%, that will be halved in 2024.
How other cryptocurrencies would perform according to their all-time high market cap?
- XRP would trade at this price if it hits its all-time high market cap
- Ethereum would trade at this price if it hits its all-time high market cap
- Dogecoin would trade at this price if it hits its all-time high market cap
- SHIB would trade at this price if it hits its all-time high market cap
- Cardano would trade at this price if it hits its all-time high market cap
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