Is Bitcoin's Price simply controlled by Supply?

(or how low would Bitcoin go)

I’ve always been interested in the Forex market, particularly mathematical formulas to predict the movement of the market, however, in Forex it’s very difficult to do as there is not a consistent​ money supply.

So for example, with Sterling (GBP), there have been times when the Bank of England have introduced quantitative​e easing. Now QE, as it’s called,​ plummets​ a currencies value. Simply because you are printing more currency. Almost all fiat currencies are not backed by anything except a promise to pay.

I have been working on a mathematical formula​ using the magic number of 61.8 (or 62). More Bitcoin is created every day by mathematical formulae, this is a controlled expansion of the currency. Meanwhile, the demand for the cryptocurrency increases. So this means to me there i, in fact,​t a baseline that the curerncy sits at. Fluctuations around that line are simply the result of supply and demand.

Today, I think I have finally solved it.

The chart shown is from Tradingview and I’ve written the indicator using the PINE language. You can see that at it’s “direst” moment the currency returns pretty much to the red line of the indicator, this is acting as a mathematical support.

Every currency has an ideal price, and I would suggest that the line I have drawn is pretty much the ideal price of Bitcoin.

Only time will tell if this chart is correct, however, if it is, that means that the currency hit it’s base line and now can only really move in an upward direction – all be it slowly.

The reason ofcourse that the currency’s price will increase in value over time at that rate is that the mined new Bitcoin is actually owned by the miner, or the mining pool. It doesn’t just “appear” in the blockchain not belonging to anyone, thus creating a “demand” that matches the growth of the coin.

This is all theoretical and invest at your own risk, but I think this could be the path of the coin in the future.

Orignally posted on my blog at ukbitcoinblog.com!