Joe had $1000, he bought 100 bitcoins at $10. After one year, he sold them for $1100 at $11. He spent $100 and reinvested the rest $1000 back into bitcoin
Only 10 bitcoins were actually sold from him the second year, and 9 bitcoins will be sold from him the year after, etc... He will be able to spend $100 year after year, like a 10% interest earned forever
So, if everyone sell 10% of their purchased coins per year, and the number of coins per day is decreasing by 16% per year (50% every 4 years), the coin supply will still derease by 6% per year
This means, with a good cash out strategy (sell 10% of coins each year), people could keep making profit while maintain the deflation trend of bitcoin, thus price will appreciate continuously, at least 6% per year
In above case, Joe only buy once and keep cashing out year after year, so averagely each year there should be 1.04x more people to buy bitcoins (if every one spend only $1000 like Joe), in order to keep the 10% price appreciation (together with a 6% decrease in supply)
If the price appreciation speed is higher, say 100% per year, Joe can still keep this 10% cash out strategy, but the second year he will have much higher amount to spend, and that will also require 2x number of new joiner to support the higher bitcoin price
What if Joe decided to purchase $1000 worth of coins each year until he retire after 30 years? Same, but price appreciation speed will be much higher during those 30 years because of constant buying support and no sell pressure from him. He would have accumulated so much coins during those 30 years, and when he start to spend 10% of them, he will cause a large increase in coin supply, but his profit will be bigger since he reinvested all the returns back into bitcoin during those years
No matter one year or 30 years investment period, after Joe quit, if there is another Joe start to invest in bitcoin, the demand for bitcoin will not reduce, just like a pension fund, Joe's children and grand children will join it one after another, so long term wise this is sustainable
With many different investors that holding from 1 year to 30 years, and different start time, the sell pressure will be more evenly distributed, if all of them hold a strategy of cashing out no more than 10% each year, then they will all benefit from the investment
So, it is easy to see, even the underlying bitcoin economy does not grow at all, just because bitcoin's deflation nature, it will become a perfect medium for saving and investment
If bitcoin's supply can be arbitrarily changed like fiat money, then all of these won't work at all
(Edit: added the simulation of daily coin supply for 1, 2 and 4 years investing period)
Only 10 bitcoins were actually sold from him the second year, and 9 bitcoins will be sold from him the year after, etc... He will be able to spend $100 year after year, like a 10% interest earned forever
So, if everyone sell 10% of their purchased coins per year, and the number of coins per day is decreasing by 16% per year (50% every 4 years), the coin supply will still derease by 6% per year
This means, with a good cash out strategy (sell 10% of coins each year), people could keep making profit while maintain the deflation trend of bitcoin, thus price will appreciate continuously, at least 6% per year
In above case, Joe only buy once and keep cashing out year after year, so averagely each year there should be 1.04x more people to buy bitcoins (if every one spend only $1000 like Joe), in order to keep the 10% price appreciation (together with a 6% decrease in supply)
If the price appreciation speed is higher, say 100% per year, Joe can still keep this 10% cash out strategy, but the second year he will have much higher amount to spend, and that will also require 2x number of new joiner to support the higher bitcoin price
What if Joe decided to purchase $1000 worth of coins each year until he retire after 30 years? Same, but price appreciation speed will be much higher during those 30 years because of constant buying support and no sell pressure from him. He would have accumulated so much coins during those 30 years, and when he start to spend 10% of them, he will cause a large increase in coin supply, but his profit will be bigger since he reinvested all the returns back into bitcoin during those years
No matter one year or 30 years investment period, after Joe quit, if there is another Joe start to invest in bitcoin, the demand for bitcoin will not reduce, just like a pension fund, Joe's children and grand children will join it one after another, so long term wise this is sustainable
With many different investors that holding from 1 year to 30 years, and different start time, the sell pressure will be more evenly distributed, if all of them hold a strategy of cashing out no more than 10% each year, then they will all benefit from the investment
So, it is easy to see, even the underlying bitcoin economy does not grow at all, just because bitcoin's deflation nature, it will become a perfect medium for saving and investment
If bitcoin's supply can be arbitrarily changed like fiat money, then all of these won't work at all
(Edit: added the simulation of daily coin supply for 1, 2 and 4 years investing period)
There are too many rules to make sure that Bitcoin always appreciates. So pretty much this will never happen as not everyone is going to do what you stated.
