Question:
I have read few posts of persons talking about losing their wallet's containing BTC and couldn't recover it at all. Hence, as people keep losing their BTC due to loss of wallet seed phrase, can it affect or cause a decline in BTC supply entirely?
Let us say there are two kinds of supply created by Bitcoin, the Total supply (total coins that can be mined) and the total circulating supply. In Total supply, lost BTC almost has no effect because it is still part of the total supply while in active circulating supply the answer to this question is obvious. Lost Bitcoin will affect the active circulating supply of Bitcoin. Although idle Bitcoin is still part of the total supply of Bitcoin, the one that has an effect on the market is the active supply.
Obviously, in terms of market trade, less supply with the same amount of demand will result in a price uptrend and vice versa. With lost BTC it helps make active BTC supply rarer and more scarce in the market.