The scarcity effect describes the economic principle where an asset’s perceived value increases as its availability decreases. In digital assets, this is often tied to fixed supply schedules or token burning mechanisms that reduce the circulating quantity. This limited supply can drive demand and consequently influence price appreciation.
Context
The scarcity effect is a primary driver discussed in relation to the valuation of many cryptocurrencies, particularly those with predetermined maximum supplies like Bitcoin. Debates often revolve around whether this programmed scarcity is sustainable and its long-term impact on market dynamics.
We use cookies to personalize content and marketing, and to analyze our traffic. This helps us maintain the quality of our free resources. manage your preferences below.
Detailed Cookie Preferences
This helps support our free resources through personalized marketing efforts and promotions.
Analytics cookies help us understand how visitors interact with our website, improving user experience and website performance.
Personalization cookies enable us to customize the content and features of our site based on your interactions, offering a more tailored experience.
