🏛️ [Analysis] Whither the price of Bitcoin - David Andolfatto and Andrew Spewak

The St. Louis Federal Reserve’s David Andolfatto and Andrew Spewak argue that altcoins place a downward pressure on the purchasing power of all cryptocurrencies, including Bitcoin ($BTC). Using economic theory, Andolfatto and Spewak see Bitcoin bound between the ultra-bull and ultra-bear forecasts: a non-zero bottom, but no ridiculous tops. Looking at the bullish case, the tandem find that the more altcoins enter the market, the more downward pressure is put on the exchange rate between Bitcoin and altcoins. No intrinsic exchange value exists, as cryptocurrencies have no intrinsic value, meaning the exchange rate could go anywhere. It is most likely the case, however, that the purchasing power of all cryptocurrencies decreases as the supply of altcoins increases, either by creation of a new project's coins or old projects releasing more. Simply, the more altcoins exist, the lower the price of Bitcoin will be compared to the alternative of Bitcoin in a less flooded cryptocurrency market. In the bearish case, Andolfatto and Spewak outline a non-zero bound bottom because of Bitcoin’s permissionless access and decentralized database system, two features that people will place value in.