Help me understand BTC pricing

[Evanston45]

Am I correct in thinking that as the price of bitcoin goes up, it will take a lot more money to raise the price? Here’s an example…when bitcoin was $10,000 if 10 people bought $10,000 each, that meant 10 coins that we’re taken out of circulation driving the value of bitcoin up much more than if the price of bitcoin was $100,000 and 10 people bought $10,000 each of bitcoin that’s taking only one bitcoin out of circulation. So as the price of bitcoin goes up it will take a lot more cash inflow to raise the price. So is it safe to say that we will not see rapid gains like we had a few years ago where a bitcoin would go from 1000 to 10,000? I don’t see how so much money can come into the market to make it rise from 100,000 to 1,000,000 in an equivalent time span

[Darker45]

Yes, of course. That's basic logic. But there's no taking out of circulation. The Bitcoin that you bought is not taken out of circulation. It is not up for selling, though.

The price of Bitcoin is simply about how much do buyers bid. Since there is a strong demand and there's very limited supply for selling, buyers will compete against each other. To make sure that somebody's buy order gets filled, one needs to put the best price. This is primarily the reason why the price goes up.  

So it is correct to say that for the price to go much higher, more money is needed. It is, therefore, easier for Bitcoin's price to double when it was just $1,000 than when it is already $60,000.

[Azar138]

Am I correct in thinking that as the price of bitcoin goes up, it will take a lot more money to raise the price? Here’s an example…when bitcoin was $10,000 if 10 people bought $10,000 each, that meant 10 coins that we’re taken out of circulation driving the value of bitcoin up much more than if the price of bitcoin was $100,000 and 10 people bought $10,000 each of bitcoin that’s taking only one bitcoin out of circulation. So as the price of bitcoin goes up it will take a lot more cash inflow to raise the price. So is it safe to say that we will not see rapid gains like we had a few years ago where a bitcoin would go from 1000 to 10,000? I don’t see how so much money can come into the market to make it rise from 100,000 to 1,000,000 in an equivalent time span

You are absolutely correct. The potential growth ups to market capitalisation. Since Bitcoin has the biggest capitalisation, it is really difficult to be pumped in the short time. So to make the price of bitcoin goes up it will take a lot more cash inflow to raise the price compared to low market cap coins. But it will grow just because of its value, so we are hodl it.

[QueenVera]

While much money is needed, demand has to also increase and this two factors work together. The increase in demand brings in more money to the market which makes the sellers withhold from selling or place higher selling price therefore increasing the price of Bitcoin. Actually, the more the price of Bitcoin increase the more money is in the market.

Bitcoin bought are only taken from circulating supply available for trading when you buy from an exchange and transfer to your wallet. Keeping them on an exchange do not take them out of circulation as the exchange still have control over the coins and what is currently displaying as Bitcoin in your dashboard is not Bitcoin but IOU version of it, they only send you real Bitcoin when you withdraw to your personal wallet, which you should always do.

[pooya87]

Am I correct in thinking that as the price of bitcoin goes up, it will take a lot more money to raise the price?

This is both right and wrong.
First we have to see what "raise the price" means. Going from $1 to $2 is a $1 rise but percentage wise it is a 100% increase. However going from $1000 to $1001 is also a $1 rise but it is a 0.1% rise. The former will take a much bigger amount of money compared to the later. So we have to first take percentage rise into consideration which is what people usually forget. An stock example is Berkshire Hathaway that got dumped $5936 in the past 24 hours but that was 1.35%.

Secondly we have to take adoption into consideration. Bitcoin is not like other things, it is on the growth. This means as we move forward we see an increasing amount of people adopting bitcoin and they are bringing a lot more money in total, so it is understandable to see price rises take place even faster than before.

But how much money it takes to go up 1% for example, depends on how packed the orderbooks are not what the price is. For example if the order book from $1 to $2 is $10 million but from $1000 to $2000 is $9 million it still is easier to do the later.
This is what we sometimes see when we have a quick jump. Like from $3800 to $6200 in a couple of days. Or the recent 63% rise in 19 days from $41k to $67k.

[Leviathan.007]

Speaking of bitcoin price, the value can be changed overtime by many factors, people including Mr.buffet believe bitcoin price is fake and it doesn't have any value by itself and the price and the rise of the price is just fake, but if you think deeply into it you will understand the price cames from the supply and demand, regarding supply everything is clear and the supply is limited by the demand of bitcoin rises every day after more people know about bitcoin and it's being available for trading on new people and the price rises in return.

[slaman29]

Remember also that we are talking strictly about spot markets here if you want to talk about supply and demand. Most of the other markets you see out there are derivatives, as in, derived from what is actually happening on the spot market.

I think apart from supply in circulation, you also have to take into account flow/stock like the s2f model.

It is not just how much is in circulation, but also how much is available to be bought, and how much more is coming in the pipeline

[crwth]

I'm looking at it from a different standpoint. If you were to check the total supply/circulating of BTC, you would see it as around 18,856,656 BTC, and the total market cap is $1,117,068,131,730

To get the price you just divide the market cap with the total supply

Code:

1,117,068,131,730/18,856,656 = 59,239.99099999491

That would make the average price of it per BTC. So if you want to get the $100000 price of BTC you can just increase the market cap and that's the estimated amount of money that should be in the BTC market to have that kind of price.

Code:

1,885,665,600,000/18,856,656 = 100000

The market cap should be around $1,885,665,600,000 at the current supply. More money required, yea.

[Poker Player]

I'm looking at it from a different standpoint. If you were to check the total supply/circulating of BTC, you would see it as around 18,856,656 BTC, and the total market cap is $1,117,068,131,730

To get the price you just divide the market cap with the total supply

Code:

1,117,068,131,730/18,856,656 = 59,239.99099999491

That would make the average price of it per BTC. So if you want to get the $100000 price of BTC you can just increase the market cap and that's the estimated amount of money that should be in the BTC market to have that kind of price.

Code:

1,885,665,600,000/18,856,656 = 100000

The market cap should be around $1,885,665,600,000 at the current supply. More money required, yea.

This explanation, although logical at first glance, does not take into account trading volume. In periods of low trading volume the price can move with less money than in periods of high volume. I think this is what pooya87 was trying to explain when he said the following:

But how much money it takes to go up 1% for example, depends on how packed the orderbooks are not what the price is. For example if the order book from $1 to $2 is $10 million but from $1000 to $2000 is $9 million it still is easier to do the later.
This is what we sometimes see when we have a quick jump. Like from $3800 to $6200 in a couple of days. Or the recent 63% rise in 19 days from $41k to $67k.

[o_e_l_e_o]

A lot of incorrect responses in here.

The market cap does not tell you how much money is in the system. Raising the price depends on the amount of buy and sell orders on the books, and not on the current price.

Lets say I have just created a new coin. There are 1 million coins, and I hold all of them. I sell 10,000 coins to Alice for $10,000. She has paid $1 per coin, so the market cap of my coin is now $1 million. $10,000 entered the system, my market cap increased by $1 million, and the price of a single coin increased by $1.

Alice now sells 100 of her coins to Bob, but she charges him $300. Bob has paid $3 per coin, so the market cap of my coin is now $3 million. Only $300 more entered the system, but the market cap increased by $2 million this time, and the price of a single coin increased by $2.

In the first trade it took $10,000 to raise the price by $1, but in the second trade it only took $300 to raise the price by $2, even though the coin was already more expensive.

So no, it does not necessarily take more money to raise the price when the price is higher. It depends entirely on how many people are buying and how many people are selling.

[Poker Player]

In the first trade it took $10,000 to raise the price by $1, but in the second trade it only took $300 to raise the price by $2, even though the coin was already more expensive.

Anyway, isn't that explanation a bit oversimplified? Otherwise, it would be very easy to pull down the price of Bitcoin, stocks or other assets, with many small volume buy orders. Imagine there is only one order to buy many coins for $1M and many orders for only $1. Would the price go down? It is clear to me that with lower trading volume the stock can move more, as I said before, but I don't know if it would go to those extremes.

[o_e_l_e_o]

Anyway, isn't that explanation a bit oversimplified?

Oh absolutely, but it shows that increases in market cap don't reflect that amount of money entering the system, and it highlights that less money can result in bigger price changes at a higher base price, depending on the buy and sell orders on the books.

[Ucy]

I think what is important is how much Bitcoin is bought for serious use. Serious uses include investment that benefits the bitcoin economy, using Bitcoin within the economy, holding long-term, etc.
Doesn't include buying to gamble (which means taking big risk) to make quick gains and exchange for fiat

I think if Bitcoin Network continues to develop and build a thriving self-sustaining economy without compromising on its principles, there will be continuous demand that keeps pushing price higher. It's important to create the right kind of economy that encourage demand with the kind of security that give people the confidence to use Bitcoin as a store of value

[o48o]

Am I correct in thinking that as the price of bitcoin goes up, it will take a lot more money to raise the price? Here’s an example…when bitcoin was $10,000 if 10 people bought $10,000 each, that meant 10 coins that we’re taken out of circulation driving the value of bitcoin up much more than if the price of bitcoin was $100,000 and 10 people bought $10,000 each of bitcoin that’s taking only one bitcoin out of circulation. So as the price of bitcoin goes up it will take a lot more cash inflow to raise the price. So is it safe to say that we will not see rapid gains like we had a few years ago where a bitcoin would go from 1000 to 10,000? I don’t see how so much money can come into the market to make it rise from 100,000 to 1,000,000 in an equivalent time span

You are talking about marketcap. Bitcoin has rised to where it is really fast because the marketcap has been undervalued. Valuation has nothing to with price of a single coin, everything is about the marketcap and bitcoin marketcap started from veery low to where it is now.

But still it's hard to speak about future gains of it, as when bitcoin started there was only few altcoins alongside with it, but now the whole crypto marketcap has sparked at the same time and saturated itself with random shitcoins.

[Imran232]

Yes, brother, it truly depends on marketcap. I know this from a youtube channel. Where he says the market price depends on the market's circulating supply, and then when users buy and sell the coin at a price, it adds to its whole marketcap value. It is trying to stabilize the price of the market. And now you can ask why the price is down to a coin. Look for this: we have to understand when the bitcoin marketcap is up, when LPPT users buy bitcoin, then the amount is added to the bitcoin marketcap. But when a user sells bitcoin, then the marketcap decreases and the user too. And that is how the price-dumping pump works.

[galambo]

Speaking of bitcoin price, the value can be changed overtime by many factors, people including Mr.buffet believe bitcoin price is fake and it doesn't have any value by itself and the price and the rise of the price is just fake, but if you think deeply into it you will understand the price cames from the supply and demand, regarding supply everything is clear and the supply is limited by the demand of bitcoin rises every day after more people know about bitcoin and it's being available for trading on new people and the price rises in return.

Buffet concern is understandable, as he is in stocks and has no stake in BTC that's why he thinks BTC is fake.
I too agree with the fact that supply and demand is the main factor driving demand of any commodity. Its latest halving that has reduced the supply rate of BTC and as a result price has gone up.

So no, it does not necessarily take more money to raise the price when the price is higher. It depends entirely on how many people are buying and how many people are selling.

Just a quick question. Don't you think there are equal no of buyers as sellers and vice verse? When somebody sells then somebody buys.

[samuraijin]

Am I correct in thinking that as the price of bitcoin goes up, it will take a lot more money to raise the price? Here’s an example…when bitcoin was $10,000 if 10 people bought $10,000 each, that meant 10 coins that we’re taken out of circulation driving the value of bitcoin up much more than if the price of bitcoin was $100,000 and 10 people bought $10,000 each of bitcoin that’s taking only one bitcoin out of circulation. So as the price of bitcoin goes up it will take a lot more cash inflow to raise the price. So is it safe to say that we will not see rapid gains like we had a few years ago where a bitcoin would go from 1000 to 10,000? I don’t see how so much money can come into the market to make it rise from 100,000 to 1,000,000 in an equivalent time span

it's not in the near future, so usually it happens every 4 years as many of us know here and even then I'm not sure for this year if bitcoin can touch $100k as people predict, looks like we are stuck at $60k and hard to get other cash flows coming into this crypto market, so it's only a matter of time until the end of this year

[o_e_l_e_o]

Just a quick question. Don't you think there are equal no of buyers as sellers and vice verse? When somebody sells then somebody buys.

Sure, for every trade there is a buyer and seller, but that doesn't mean there are the same number of buyers and seller or that they are trying to buy or sell the same amount of bitcoin. If both sides of the order book were perfectly balanced, the price would never move. When there are more buyers (or, more accurately, more buying volume regardless of the actual number of physical buyers), the price goes up, and when there are more sellers/sell volume, the price goes down.

[hatshepsut93]

The market cap does not tell you how much money is in the system. Raising the price depends on the amount of buy and sell orders on the books, and not on the current price.

You can see it on practice when company stocks that are worth a couple of dollars are being traded for millions of dollars per trade, yet the price only moves by tiny fractions of percent. Meanwhile on altcoin market coins that are worth a few dollars jump up or down by tens of percent every day.

So no, it does not necessarily take more money to raise the price when the price is higher. It depends entirely on how many people are buying and how many people are selling.

However, it takes more money to move the price now than it did in the past, because the market has higher volume now. Both the price and the volume are projected to increase, but we can also have a situation when the price grows slowly while the volume and "difficulty to move Bitcoin price" grows at a faster rate. The vice versa is possible too, at least temporarily.

[teosanru]

Am I correct in thinking that as the price of bitcoin goes up, it will take a lot more money to raise the price? Here’s an example…when bitcoin was $10,000 if 10 people bought $10,000 each, that meant 10 coins that we’re taken out of circulation driving the value of bitcoin up much more than if the price of bitcoin was $100,000 and 10 people bought $10,000 each of bitcoin that’s taking only one bitcoin out of circulation. So as the price of bitcoin goes up it will take a lot more cash inflow to raise the price. So is it safe to say that we will not see rapid gains like we had a few years ago where a bitcoin would go from 1000 to 10,000? I don’t see how so much money can come into the market to make it rise from 100,000 to 1,000,000 in an equivalent time span

Obviously yes, you can understand this concept better using the concept of market capitalisation, whenever there is an increase in price or decrease in price there is an corresponding rise or fall in market cap because it is derived from price multiplied by total supply, now whenever you will move the price up the amount of market cap you see has pumped corresponds to the amount of inflow into the market. So obviously it's difficult to move highly priced coins if their market caps are high.