Is there restriction in purchase of bitcoin?

[sunsilk]

Many are holding and doesn't have plans of selling it but it's not going to cover the whole supply that we've got in bitcoin's economy.

So literally, this is what actually increase or decrease the price of bitcoin.

Yes, it all applies the law of supply and demand. Thus, we're seeing the price of bitcoin now up and that's because there's a buying demand.

The demand of purchase of it in the market with the availability of holders wanting to sell?

There's always people that want to sell it at any price and not just us individuals but also exchanges.

[pixie85]

This is generally how the market works.

If everyone stopped selling their bitcoins they'd go up in value because speculators would expect those people wanting a higher price.

But there's usually always someone wanting to sell and someone wanting to buy so even if neither liked the current prices, they'd place asks and bids and those orders would converge (meet) at a new price that the asset would become.

Correct and the more participants there are in the market the less likely it is that such a withhold will ever take place.
It could happen at a small exchange with 100 people but it won't happen when there's 100 exchanges with 500+ active traders on each of them.

Of course with the limited number of bitcoins there can be a supply squeeze once governments come in trying to buy. For a country spending a billion dollars on bitcoin is nothing because they can print their money. They have infinite supply while the supply of bitcoin is finite.

Such squeeze will not last forever though. Once people see what's happening they will stop selling to push the price to ridiculous levels like 1 million per coin and then again start selling once they're 100x in profit. In that case the buyer will either have to accept offer or fold like in poker.

[drwhobox]

Of course with the limited number of bitcoins there can be a supply squeeze once governments come in trying to buy. For a country spending a billion dollars on bitcoin is nothing because they can print their money. They have infinite supply while the supply of bitcoin is finite.

That sounds really horrible but no country will do that with their economy only to control bitcoin. With that limited supply of bitcoin government can try to gain control over bitcoin and make it manipulated, but no one would dare to do that.
Although bitcoin is peer to peer, so the government also can not take control of everyone's coins.

[jackg]

That sounds really horrible but no country will do that with their economy only to control bitcoin. With that limited supply of bitcoin government can try to gain control over bitcoin and make it manipulated, but no one would dare to do that.

There are governments known for printing each other's money on agreement and some known for printing currency of other nations without their control or say (it's been a fairly common war tactic in the past).

Most central banks try to control inflation, if you get a country whose inflation goes negative or below target (like the UK/EU do a lot of the time) then there's a chance bitcoin's price could pump if they step in and do something like offering low interest loans, to buy back their own bonds or to buy shares in companies in that county (thus allowing those places to have a greater amount of free cash they can use to invest in assets).

It could happen at a small exchange with 100 people but it won't happen when there's 100 exchanges with 500+ active traders on each of them.

If it did happen with a lot of people I wonder who would actually be in control of that situation. A troll anywhere could probably cause the price to crumble and force a lot of people to sell really low (there's obviously almost no chance of this happening but it's probably another reason why it wouldn't - a situation where everyone tries to manipulate the market might light to a situation where all the exchangers are just manipulated into selling lower).