Contest !! || Supply and demand dynamics in cryptocurrency

Hello guys,
It's a pleasure on my path to share with you all my entries in this week's contest which is titled "Supply and demand dynamics in cryptocurrency" which was organized by @khursheedanwar. It is an interesting contest and I would love to drop my entry ASAP.

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Before we go ahead I would like to invite @dave-hanny, @rakiya, and @ruthjoe to join this contest in this community today and share their participation as well, I do hope to see and read your entries as well.

What do you understand about supply and demand in the market?

Demand and supply are very important and prominent words used in economics and the market at large. Today I will want to explain my understanding of both words.

Demand is a concept which means that traders need a particular asset. When the need or want of an asset is much it means that there is a high demand for that asset. This will make the price of the asset go high as the law states that the higher the demand the higher the price.

Supply on the other hand means that the asset is much and for that reason, the price of the asset will be low. The law of supply states that the higher the supply the lower the price. When you have many assets in supply then you will notice that the price of the asset will be low.

So demand and supply both work hand in hand. When the demand is high the price will be high and when the supply is high the price will be low. Both zones are important in the crypto market as the whales use them to liquidate small accounts. Also, those who trade in the same direction make good money.

What effect would be on the market if the supply of particular cryptocurrencies is increasing?

If the supply of a particular cryptocurrency is increasing then from the law of supply I have stated above, you will notice that the price of the asset will be reducing.

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When the supply of the asset becomes much the value of the asset will reduce which will lead to a decline in the price. Everyone will have the asset since the price is not much because the supply is much.

So the effect of the assets with much supply is that price will always reduce. The more the supply the more the decrease in the price and it will always continue in that order. The scarcity of an asset most times makes the price higher.

So to reduce the supply of Steem in circulation we have the burns-teem mechanism which is used by the Steemit team to help increase the price of the asset.

What effect would be on the market if the demand for particular cryptocurrencies is increasing?

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When the demand for a particular asset is increasing we will notice an increase in the price of the asset. This is because they assert won't be enough any longer to serve the many people needing it. It is because of the demand for Bitcoin that the price of Bitcoin to risen to the level it is at the moment.

So whenever we notice a demand for a particular asset we know that the price of the asset will be skyrocketing to the moon and only those who have good money at then will be able to purchase and hold the asset at that time. So that is all about the demand and supply of assets in the crypto world.