What would happen in a deflationary hoarding scenario? - page 2.

NeuroticFish

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Quote from: PhoenixZephyrus on February 16, 2023, 06:49:22 AM

Since Bitcoin is by definition, deflationary, because it has a limited supply

I think that deflationary means that the supply is meant to decrease and in case of bitcoin, especially in the last 5 years, I expect that the amount of bitcoins lost is tiny.

Quote from: PhoenixZephyrus on February 16, 2023, 06:49:22 AM

Now what would happen if people did start suddenly hoarding? I mean HODL is just a huge meme at this point but what if EVERYONE actually did that? What would things look like then?

Well, at least the miners cannot just keep HODLing, they are businesses that have to pay their bills and they can do that only by selling some of the coins they obtain.
(Plus, I think that there's pretty much always a price target for the HODLers, and after that target is met, they'll also sell some.)

Coin_trader

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If everyone HOLD then the price won’t move and stay as is on the time when mass hodling started since no one is selling too because everyone will just keep their Bitcoin to their wallet unless you provide some exceptions that exchange will still sell with their own liquidity.

Altcoins will pump to the moon since investors will find other investment opportunities to have a same profitability like Bitcoin.

Husires

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There is something in our minds called greed and fear. These two will make you think of selling, even if you know that the price will rise in the future, especially if you have a lot of basic needs besides food, drink, rent, and daily expenses.

Therefore, there are always those who will be ready to sell, but the instinct of greed is what restrains the sale, but in moments the sale is ideal, such as selling at the top of 60K and buying at 16K.

PhoenixZephyrus

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I'm currently going through a Bitcoin course for developers while studying for Summer of Bitcoin. Well I came across a pretty interesting scenario and I'm wondering what's going to happen if that were to be the case.

Since Bitcoin is by definition, deflationary, because it has a limited supply, it will supposedly have more purchasing power over time (assuming good adoption and acceptance of bitcoin). Bitcoin is limited to 21mil forever. I quote from the course,

Quote

Many economists argue that a deflationary economy is a disaster that should be avoided at all costs. That is because in a period of rapid deflation, people tend to hoard money instead of spending it, hoping that prices will fall. Such a phenomenon unfolded during Japan's "Lost Decade," when a complete collapse of demand pushed the currency into a deflationary spiral.

Deflation in bitcoin is not caused by a collapse in demand, but by a predictably constrained supply. Now what would happen if people did start suddenly hoarding? I mean HODL is just a huge meme at this point but what if EVERYONE actually did that? What would things look like then?

Topic: What would happen in a deflationary hoarding scenario? - page 2. (Read 214 times)