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41 sats \ 26 replies \ @denlillaapan OP 20h \ parent \ on: Fama: Bitcoin is Dead (Promarket/Capitalisn't) econ
one way we can see that this isn't a paradox or that there's a flaw in the logic is this:
if, because for every buyer there's a seller and thus "selling a coin does not decrease its price," how could (relative) prices ever move?
How is it that BTC/USD was 101,500 this morning and is 96,000-something now? every single trade that moved the price up, down, sideways and then down during the day had symmetrical buyers and sellers on each side.
The original confusion reminded me a lot of studying Newton's 3rd Law for the first time and not understanding how any movement can happen.
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I like this analogy!
The apple is pulling on the earth as hard as the earth is pulling on the apple.
But the apple moves because F = ma and the Earth's mass is relatively much bigger than the apple's. For one-sided acceleration to occur, there must be a difference in mass.
Selling btc for dollars exerts the same sell pressure on btc as the person selling dollars exerts on dollars.
But the price of btc goes down only if fewer people want btc and the next offer to sell btc at that level of dollars doesn't have a buyer. For a price change to occur, there must be a difference in buyers.
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That's it... And the relative volumes can be non-equal.
Now, for your Voskuil example, does that imply that differences in sales volume on either side of a trade CAN effect price?
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How is it that BTC/USD was 101,500 this morning and is 96,000-something now?
Wouldn't it be that the price has moved because people want less bitcoin than they previously held (or more of something else)?
When these holders of btc wanted to acquire something else they had to look longer/harder/offer more btc to find people who were willing to trade with them.
The trades themselves don't move the price. The change in people wanting bitcoin moves the price.
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...but they display that wanting less/more by acting in the marketplace, ie making trades
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Right, but this is what gets me: supply and demand is really just demand then -- either not demanding as much as you once did (supply) or demanding more than you once did (demand).
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Imagine airdropping some forkcoin onto Darth. Before and after the airdrop, Darth has zero demand for the forkcoin, but the supply changed, because he's immediately going to buy some bitcoin with it (or beer, but bitcoin is better for this conversation).
Whatever bitcoin he bought was the cheapest currently available on the market, so the exchange rate of bitcoin to forkcoin is now lower, because the supply (willingness to part with) of forkcoin increased.
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Did the willingness to part with bitcoin also increase during this trade?
If no, then how does the act of Darth offering forkcoin for sale increase supply? (Isn't it rather the airdrop that increased supply?)
If yes, then why shouldn't the exchange rate of forkcoin to bitcoin also go lower because someone also was willing to part with bitcoin in the trade? (Obviously, they can't both decrease in this example).
Finally, I move that all future conversations about bitcoin should use @DarthCoin as the example.
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I don't understand why am I involved in this useless discussion.
Why am I related with a forkcoin?
I like using Darth here, because we know his demand for Forkcoin is zero. Therefor, there is no corresponding increase in Forkcoin demand.
It's better to imagine this as something like an inheritance, rather than airdrop, so that the total stock remains unchanged. All that's happening is the willingness to exchange those Forkcoins increased.
The demand for Forkcoin is unchanged, because nothing changed amongst the holders of bitcoin: no one in this example became more willing to buy.
What's happening is that Darth is taking what was an unrealized offer. The offer was unrealized precisely because no one was as willing to part with their Forkcoin as Darth is. On the other end of the exchange is someone who was unwilling to part with their bitcoin for any of the available Forkcoin offers. It's only because Darth is offering more that the exchange happens.
Hopefully, that illustrates why an increased willingness to part with a fork coin will in fact lower it's price.
If not, I'll try to write up a whole parable and throw in some supply/demand schedules.