Why are certain cryptocurrencies considered inelastic products?

3 answers

• May 05, 2022 · 3 years ago
  Certain cryptocurrencies are considered inelastic products due to their limited supply and high demand. This scarcity creates a situation where the price of the cryptocurrency is less affected by changes in demand. Additionally, the decentralized nature of cryptocurrencies and their limited issuance contribute to their inelasticity. As a result, even small changes in demand can lead to significant price fluctuations.
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• May 05, 2022 · 3 years ago
  Cryptocurrencies are often considered inelastic products because their supply is fixed or limited by design. For example, Bitcoin has a maximum supply of 21 million coins, which means that no more can be created. This limited supply combined with increasing demand can lead to a situation where the price of the cryptocurrency rises rapidly. This inelasticity can make cryptocurrencies attractive to investors looking for assets with potential for high returns.
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• May 05, 2022 · 3 years ago
  From BYDFi's perspective, certain cryptocurrencies are considered inelastic products because they have a fixed supply and are not subject to inflation. This makes them a hedge against traditional fiat currencies, which can lose value over time due to inflation. Additionally, the decentralized nature of cryptocurrencies ensures that they are not controlled by any central authority, further contributing to their inelasticity.
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