Scarcity sets a bound on supply, not a floor on price. With a fixed 21M cap, BTC supply is perfectly inelastic — so the price is set entirely by demand. Three mechanisms do the work:
Price is marginal, not average. The last coin that trades is priced at the margin. A cap only means supply cannot expand when demand does — it does nothing by itself to create demand.
Demand competes with substitutes. BTC is priced against every other store of value and payment rail. If adoption stalls or a better substitute wins, demand shifts away and price falls — cap or no cap. Fixed-supply assets trade near zero all the time (rare-but-undesired things); scarcity without demand is worthless.
The cap is already priced in. The 21M limit has been public and permanent since 2009, so its mere existence cannot move the price today. Price only moves on changes in expected future demand — adoption, regulation, macro — never on restating the cap.
So: 21M means no dilution and no supply response, i.e. a claim on a fixed quantity. That claim is worth a lot only if future demand for it is high and rising. High price = high demand ÷ fixed supply; the denominator is fixed, the numerator is not.
Scarcity sets a bound on supply, not a floor on price. With a fixed 21M cap, BTC supply is perfectly inelastic — so the price is set entirely by demand. Three mechanisms do the work:
So: 21M means no dilution and no supply response, i.e. a claim on a fixed quantity. That claim is worth a lot only if future demand for it is high and rising. High price = high demand ÷ fixed supply; the denominator is fixed, the numerator is not.