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in practice bubble persist for longer than this simplified scenario because the rising price action gets the attention of people who have holding as the market gets hotter, these assets mobilize and flow into the market creating multiple waves of the above dynamic

the supply is "dwindling" yet also never ending. kinda like a carrot on a stick. it's always JUST ahead but it never reaches, causing the price to go higher and higher feels like a scam right?

in theory, because all the suppliers are individual actors, there's no way to draw out the illusion of dwindling supply. everyone is tempted to just sell at the high price instead of maximizing total wealth for everyone (like debeers does)

just like a sun, the hotter it burns the shorter its lifespan. debeers wants a nice long burning good intensity burn. it does NOT want a super hot sun that explodes leaving the company bankrupt longterm while the execs runaway with cashed out stock

the "friction" in the system is how rapidly the money moves as the price gets higher. as the price increases the "volume" of money also grows. it can't grow infinitely so it must eventually stop just like when the body burns out its fat reserves

this explains the intuition behind selling when the taxi driver starts talking to you about a stock it means that the mental space has been fully saturated. everyone who CAN jump into the market already has.

two things can continue the bubble. one is debt. the other is a lower price point like a stock split. this allows the mass of poors to enter and also increases options activity since the contract sizes are smaller

imo the previous bull run is probably due to an expectation of institutional investors jumping in and continuing the run by mobilizing traditional assets and converting them into crypto (they r not stupid and they did not do that)