Bitcoin, for instance, has a hard-coded monetary supply cap of 21 million coins. As a result, individuals view it as a superior store of value compared to fiat currencies, and particularly the US dollar. Digital scarcity is what makes that digital asset so valuable. As demand continues to increase, it anchors unshakeably in an economy where fiat currencies are increasingly experiencing inflation and devaluation. As of May 2025, Bitcoin registered outstanding dominance over the cryptocurrency space. Indeed, it beats the US dollar in most of the important metrics.
Bitcoin's Fixed Supply and Scarcity
Bitcoin’s supply is preordained by its code, with a hard cap limit of 21 million coins. This very dynamic and unique feature is integrated into its Metro protocol. This scarcity guarantees that, unlike fiat currencies, Bitcoin can’t be randomly inflated by central banks. At of this writing, there are approximately 19.8 million Bitcoins in circulation. The last coins will be mined at a very gradual pace, with economists predicting that the last Bitcoin will be mined around the year 2140.
Miners earn new Bitcoins by validating transactions. They incorporate these transactions into new blocks that get added to the blockchain through a process known as mining. The issuance of new Bitcoins is specifically structured to halve about every four years, a formula called the “halving.” This makes the issuance of new coins into circulation slow at a predictable rate, which adds to Bitcoin’s overall scarcity. The next Bitcoin halving will occur sometime in 2028, depending on block timing. This event will reduce the rewards for miners by half, slowing down the rate of new coin creation.
This increasingly scarce supply cap is a critical part of driving Bitcoin’s value proposition as a store of value. For every additional dollar’s worth of Bitcoin that people want, the existing supply means that the dollar value of Bitcoin becomes more valuable as time goes on. Unlike fiat currencies, which can be printed as much as needed, this withdrawal/funding dynamic usually leads to inflation and devaluation, making them unique among forms of money.
US Dollar Inflation and Monetary Expansion
The US dollar, like most fiat currencies, has been severely devalued over time through inflation. Dollar has lost over 95% of its value since 1913. This unprecedented drop has dramatically decimated the purchasing power of both consumers and investors. The annual inflation rate in the US has hovered around 3-4% based on historical trends up to 2023, further diminishing the dollar's value.
The Federal Reserve has the unique power to expand the money supply. It uses instruments like open market operations, quantitative easing, and changes in reserve requirements to do so. Since 2008, the monetary base has already exploded from just under $800 billion to over an estimated $5.7 trillion by 2025. This continued increase indicates a rapid expansion in the level of cash flowing through our economy. When this money supply increases, it is able to create inflation. Suddenly more dollars are pursuing a fixed supply of goods and services.
Bitcoin’s fixed supply creates a counterpart hedge against inflation and monetary debasement as well. At the same time, governments and central banks are working hard to increase the money supply. Consequently, Bitcoin’s scarcity is increasingly attractive to investors seeking to hedge against inflation and fortify their wealth.
Bitcoin's Rising Demand and Market Dominance
Bitcoin’s current demand surge seems much more sustainable, with fewer hurdles in place to block it from ascending much higher. On May 12, 2025, Glassnode reported that the Relative Strength Index (RSI) for First-Time Buyers has held at 100 for an entire week, indicating strong buying pressure from new market participants. Since April 21, Bitcoin’s hot capital increased from $20.7 billion to $39.1 billion. That’s actually a huge increase of $18.7 billion, which is a 92% increase! This represents a strong stamp of approval that Bitcoin is being recognized as an institutional-grade investment asset.
Bitcoin still represents more than 40% of the crypto market, as of May 2025. It is known for having a great market capitalization and high trading volume. Additionally, its extensive adoption and acknowledgment as a store of value further confirmed its status as the top cryptocurrency. While other cryptocurrencies offer various features and functionalities, Bitcoin's simplicity, security, and established network effect give it a distinct advantage.
