The price of bitcoin went through the roof on Wednesday to $11,000 (R150,000), then dropped by the end of the day to $10,000 a coin. Large fluctuations in prices are a textbook case for an asset entirely dependent on demand pressure from investors and speculators. In this respect, it is evident that the price dynamics are heavily dependent on investors' behaviour. As of now, there are more than 16.5 million bitcoins in circulation and more than 800,000 bitcoin users (unique addresses). Early this year, there were 300,000 fewer users, while the number of coins mined and circulating barely changed (16.1 million). Demand pressure is intensifying while available supply is flattening, as is indeed designed by the protocol. The number of bitcoin transactions has been constant, around 300,000 a day, growing from around 200,000 a day at the beginning of last year. From a purely fundamental perspective, there are no signs of decelerating market activity despite the increasing difficulty of m...
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