I don't understand why the price is still in the same range, although more people starts to use bitcoin and more merchants accept it. Is this due to exchanges or people with lots of bitcoins making profit on the small rise and then dump it etc?
If someone could explain it shortly, would be great!
Let us not forget that there is an inflation of 10% going on. That means that the bitcoin holdings must grow at a 10% rate at the current price.
The market cap is a wrong indication of "how much value" there is stored in bitcoin. In reality, the amount of value people have put into bitcoin is much less. Many coins have been sold and are still held since they were a few dollars or a few tens of dollars. So in order to sustain an inflation at 10% at the current price, means actually that the real value flowing into bitcoin is very big as compared to the past.
As a simplistic example, suppose that most coins have been bought at an average price of $100.-
That means that the actual "value flown into bitcoin" would be rather $1.5 billion. At the current price, say, $350 per coin, and an inflation rate of 10%, this comes actually down to a growth of the value flowing into bitcoin of 35% per year.
In other words, even to sustain the current price, per year, one third of the total value that has flown into bitcoin since 5 years, must flow again in bitcoin even to sustain the current price.
A growth of 35% a year is HUGE, and is needed to sustain the current price, simply due to inflation.
