Definition ∞ A scarcity-driven narrative is the idea that an asset’s value is primarily determined by its limited availability. This concept highlights the economic principle where a restricted supply, particularly when combined with increasing demand, contributes to an asset’s perceived and actual value. In the digital asset space, this narrative is central to cryptocurrencies with fixed or predictable supply schedules, like Bitcoin. It posits that artificial limitations on creation can make an asset a superior store of value compared to inflationary fiat currencies.
Context ∞ The scarcity-driven narrative is a foundational argument for Bitcoin’s appeal as “digital gold” and a hedge against inflation. This discussion frequently appears in crypto news, especially around events like halvings, which reinforce Bitcoin’s supply constraints. The strength of this narrative influences investor behavior and contributes to the long-term price outlook for assets exhibiting these characteristics.
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