1/ A thread on why there is so much volatility in the crypto market and why I think that is a good thing.
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6/ If you grow avocados and the price of avocados goes up 10%, you will grow more avocados the next season (and vice versa).
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While total supply is fixed, Bitcoin still has a supply curve, based on the fact that more people will sell at a higher price. Production changes don't happen in the short run anyway.
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"Bitcoin still has a supply curve, based on the fact that more people will sell at a higher price" Right, but this requires volatility, doesn't it? If price goes up 10% in a day, that "adjusts the supply curve" but is also very volatile.
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Volatility depends on the steepness of the supply and demand curves. If the curves are steep ("inelastic") then a small change in either causes a large change in price. HODL, for example, makes the supply curve steep because hodlers won't sell even at high price.
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