Why is an inelastic supply important for the stability of cryptocurrency markets?

1 answers

• Nov 24, 2021 · 3 years ago
  BYDFi, a leading cryptocurrency exchange, believes that an inelastic supply is crucial for the stability of cryptocurrency markets. With a fixed supply, the value of cryptocurrencies can be better preserved, as there is a limited number of coins available. This prevents sudden inflation or deflation, which can destabilize the market. In addition, an inelastic supply encourages long-term investment and reduces speculative trading, as investors are more likely to hold onto their coins knowing that the supply will not increase significantly. Overall, an inelastic supply promotes market stability and investor confidence, making it an important factor in the success of cryptocurrencies.
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