For the first time in human history, Bitcoin (BTC) revolutionised the financial world by providing restricted supply inflation for digital assets. Thousands of cryptocurrencies have soared since then, with varying supply inflation patterns. Notably, cryptocurrency prices are affected by supply inflation as well as market demand for the coin or unit. A strong demand for a restricted supply causes the price to rise versus other currencies, but an increase in supply of more than what is required causes the price to decrease. Supply inflation is the rate at which new coins or tokens get added to the circulating supply of cryptocurrencies. This inflation rate is often calculated by dividing the number of coins that will be added each year by the existing circulating supply.
A simple application of this idea is to see how much the price of a specific cryptocurrency will be after a year (or more), within the identical market capitalization. Surprisingly, when inflation adds more coins to the circulating quantity, the projected price falls. Finbold used a GPT-4 API bot to determine the annual supply inflation of cryptocurrencies in this context. Furthermore, the ChatGPT bot provided a list of some of the lowest rates available among the most well-known decentralised currencies in the area.
XNO (Nano)
The first choice is Nano (XNO), which has an annual supply inflation rate of 0%. This cryptocurrency has a circulating supply of 133.24 million XNO, resulting in a market capitalization of $93.27 million at current prices ($0.70).
Notably, all Nano units issued in the genesis block are currently in circulation, implying that there would be no supply inflation for this low-cap cryptocurrency. Nonetheless, demand for Nano has not increased consistently after November 2022.
Despite having the lowest supply inflation in the cryptocurrency industry, XNO lost 11.4% of its value in a year. The preceding result demonstrates the significance of an increased desire for value appreciation, which, in the absence of additional selling forces, might launch a positive trend.
XMR (Monero)
Monero (XMR) was chosen by ChatGPT-4 as the cryptocurrency with the second lowest supply fluctuation. Monero adopted a 0.6 XMR per block tail emission in May 2022.
Given that a new block is mined every two minutes, 423 XMR are mined every day, for a total of 157,680 XMR added to Monero’s circulating supply per year. For the 18.35 million coins in circulation at the time of publishing, this equates to a 0.86% inflation rate. Monero is trading hands for $169 per coin, representing a 6.96% annual increase from $158 per coin in November 2022. Despite supply inflation, this indicates greater demand for the privacy-focused coin.
BTC (Bitcoin)
Meanwhile, while Bitcoin has the most supply inflation of the three ChatGPT-4 selections, it remains one of the cryptocurrencies with the smallest annual rates in the market. With a current block emission of 6.25 BTC every 10 minutes, 900 BTC enters the supply that circulates per day.
In 365 days, 328,500 BTC will be in circulation by the end of 2023. With a current circulating quantity of 19.53 million BTC ($678.14 billion market value) and an annual rate of inflation of 1.68%. Interestingly, Bitcoin’s demand increased by 64% in a year, rising from $21,150 to $34,723 as of press time. Furthermore, the block subsidy will be decreased in half in 2024, reducing supply inflation by half.
However, it is vital to note that if Bitcoin reaches its all-time high market value, it will trade for $66,666. This would imply a 3.44% decrease from the all-time high price of $69,045 at the identical size in 2021. Overall, having excellent supply fundamentals is insufficient for mid-term favourable results in the bitcoin market. Demand is critical for cryptocurrencies, whether for speculative or practical purposes.
For more such updates, keep reading techinnews
