Even with the same participants it can become worthless. It’s trend and group think.this is why I dont like the scarcity argument because it’s scarce when value goes up for a year then 3yrs of bear market where it isn’t scarce apparently. Therefore it’s a fixed quantity of product which simply trends once every few years, nothing more.
When we have a bad harvest of bananas prices goes quadruple and we might say bananas are scare due to low yield. Then when yields return to normal and we have bananas cheap again we don’t continue saying bananas are scarce, just less scarce than before.
I know I can’t explain this in words of how I think btw. I am utterly retarded in my thinking but it does work
BTC will be fine, just different structure now.
I get your example, but it doesn't include leverage buying.
Let's say there is a steady conveyor belt of good banana harvests. Bananas are cheap and I buy x100 leverage and a bunch of other people did the same. There is constant demand for bananas, but price remains the same as supply meets demand. I'm not making any money.
Some fungus spreads and starts slowly killing banana plants, so supply is steadily reduced. Demand remains, so price increases. Myself and others cash some leverage gains in and buy with leverage again, but bigger. Price shoots up, banana addicts still keep buying at the inflated prices, supply further decreases, more leverage, price goes parabolic. It comes crashing down when banana addicts start feeling nauseous and stop buying bananas. Leverage winners cash out, price drops and eventually degens who messed up on leverage go broke and it all unwinds. Bananas are now cheap, scarce and there isn't much appetite for them.
Without leverage in this example banana prices go up lets says 10% every harvest due to ever increasing scarcity, until a new equilibrium between demand and supply is reached.
Without demand, leverage and scarcity you wouldn't get this parabolic type of price action. Without demand there is no price action, without leverage and scarcity there are no parabolic bullruns or capitulations.
A lot of non degens would prefer leverage wasn't allowed. Leverage and the wild swings in price causes fomo and fear on the demand side. Scarcity plus constant demand without leverage would see price go up more linearly and then plateau. Great if you got in early, but if you're hoping for another cycle you don't want this.
