Quote from: odolvlobo on July 28, 2015, 07:07:08 PM

Quote from: molecular on July 28, 2015, 05:57:12 PM

Quote from: Amph on July 28, 2015, 07:29:12 AM

traders are dumping and buying 100k per day? can you point me the source of this? i don't really care about the demand and supply but only the supply so i can compare better the reduction in the "mining supply"

if it's indeeded 100k per day than ok 1800 is nothing to that lower than 2% and will cause a 4% up in demand like you said

You're looking at it the wrong way, I think. It doesn't matter how many coins are flipped by traders each day. What matters is the net demand and net supply.

I agree, but there is no way to measure that.

Furthermore, supply and demand are not numbers. They are curves. The price is at the intersection of the curves. The reduction of mined bitcoins will shift the supply curve, but without knowing what the curves look like, there is no way to determine what effect that shift will have.

There are different ways of estimating the effect of the change in supply.

If you assume that demand is constant over time (which is not realistic, of course), then a good estimate of the effect of inflation is simply to reduce the price by about the amount of the inflation. So, in this case at the time of the halving, the price would change from dropping by 8% per year to dropping by 4% per year.

Another way is to look at the change in volume over the entire exchange volume. This comparison itself overestimates the effect because people exchange bitcoins for other things of value, not just currency.

People are also treating the halving as a supply shock, when it isn't. While rate of increase in the money supply changes suddenly from 3600 BTC per day to 1800 BTC per day, the relative change in the money supply itself is quite small.

Thanks for these comments. They are valuable.

We have to be careful when talking about "supply" in this context. It can mean 2 things:

the money supply (14 million BTC and adding 3600 / day)
the mining production output (amount of 'commodity' the producers are willing to provide to the market)

In the second meaning, the categorization of the halving as a 'supply shock' is correct.