Supply and Demand

What Are Supply and Demand?

Supply and demand are the governing forces of a market economy, which are moderated through prices.

It defines the relationship between a given product or asset and the willingness of people to either buy or sell it.

Supply and Demand Illustration

Supply and Demand Illustration | Source: Money geek

Balancing Availability

Supply is the amount of material, asset, product, or service available to the economy.

It is not so much about how much exists but how much people can get.

Demand is the requirement for products and services.

It determines the number or ratio of people interested in the items/services an organization offers and the amount of money they are willing to pay.

Influence Unleashed

We can see the market response when institutions or influential buyers gain access to an asset.

Bitcoin is an example of a scarce asset that has introduced a motion in finance by demonstrating the immense benefits of having a digital asset with a limited and finite supply.

As Bitcoin increases in demand, the more valuable it becomes.