Bitcoin Is Approaching Its Upper Limit: What’s Next?
The supply of Bitcoin is limited, 21 million coins to be exact. Currently, approximately 94.5% of the total supply of Bitcoin has been mined, with less than 5.5% remaining to be mined. This inherent shortage is a characteristic attribute of Bitcoin and a key component of its value proposition. But what will happen once all the Bitcoin has been mined?
The Impact of Bitcoin’s Scarcity
Bitcoin’s scarcity is similar to that of precious commodities such as gold, further establishing its position as “digital gold.” With fewer coins to mine, competition for the remaining BTC rises. This demand based on scarcity is one of the major reasons investors believe Bitcoin represents a hedge against inflation and conventional financial uncertainty.
The Role of Miners Post-21M Supply
Today, miners get block rewards and fees for transactions. After the last Bitcoin is mined (which is projected to happen around 2140), miners will have to survive only on transaction fees. This transition might result in increased transaction prices but can also guarantee network security as the demand for block space increases.
U.S. Crypto Reserve Plan and Increasing Competition
Recently, there has been talk of the U.S. possibly keeping Bitcoin in reserve. If institutions and governments fight over the remaining supply, it may continue to push Bitcoin’s price higher. Greater adoption and limited supply make it a special asset class with long-term potential.
What Should Investors Expect?
As Bitcoin nears its supply limit, investors will experience increased volatility in addition to possible price growth. Long-term holders tend to think that the limited nature of Bitcoin will result in long-term appreciation.
Final Thoughts
Bitcoin’s rarity is one of its strongest features, cementing its position as a store of value. With increased competition for the remaining stock, existing holders of BTC can find themselves well placed. Whether Bitcoin will keep on rising is unknown, but with its finite supply, it will always be sought after.
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