Why Is Bitcoin’s Price High Despite Its Limited Practical Use?

The high price of Bitcoin can be attributed to the following factors:

1. Supply and Demand Dynamics
   Bitcoin’s supply is capped at 21 million coins, creating scarcity. As demand increases, limited supply drives prices higher. This fixed supply is a key feature of Bitcoin’s design.
2. Popularity as an Investment Asset
   Bitcoin is widely regarded as a speculative investment. When prices rise, more investors are drawn in, creating a feedback loop of increasing demand and higher prices.
3. Impact of Halving Events
   Approximately every four years, Bitcoin undergoes a “halving,” reducing the number of new coins mined by 50%. This decreases supply growth and increases scarcity, often leading to price surges.
4. Perception as a Store of Value
   Bitcoin is often compared to “digital gold” rather than being used as a practical payment method. Its value is supported by its role as a hedge against inflation and a long-term store of wealth.
5. Macroeconomic Factors
   Policies such as monetary easing and low interest rates have led to excess liquidity in financial markets. Some of this capital flows into Bitcoin, boosting its price.
6. Market Size and Volatility
   The relatively small size of the Bitcoin market compared to traditional financial markets makes it more susceptible to price swings from changes in demand or investor sentiment.

Conclusion:
Bitcoin’s high price is less about its practical utility and more about its scarcity, investment appeal, and perceived future value. These factors sustain its market valuation despite limited use as a transactional currency.