This passage from Human Action stuck out to me as I feel as though it makes sense of what we’re seeing right now with regards to the price of Bitcoin.
“It depends on the data of each particular case at what moment and to what extent the prices of the various commodities and services are affected. In the course of a monetary expansion (inflation) the first reaction is not only that the prices of some of them rise more quickly and more steeply than others. It may also occur that some fall at first as they are for the most part demanded by those groups whose interests are hurt.”
Recent changes in our economy hurt the interests of institutional investors as well as individuals who invested more than they could afford. A significant amount of the recent demand for bitcoin (in the last 1-2 years) were from these groups. These groups are selling and once sold there will be a new, lower, price.
However, the money supply has already grossly increased and therefore there will still exist a general tendency for prices to rise. This general tendency is not going to stop any time soon. At some point in the future the price of bitcoin will also begin to rise.
I believe after the price of bitcoin settles it will then initially rise slowly before rising more rapidly.
Why? Because at that point bitcoin will then be the only medium of exchange with a price that is rising. It will be a unique point in our economy. All other fiat currencies will likely continue to have a rapid reduction in their purchasing power. Individuals will feel the purchasing power of their own currencies drop whilst bitcoins price rises. People will therefore see that it is in their own interest to hold some bitcoin. This will further increase the demand for bitcoin which means even more people take notice and so on…
I also think at that stage there will be a very heavy propaganda campaign against bitcoin. It just depends on whether or not the “crack up boom” will be quicker than our governments ability to react.