But the demand can change. Given a constant quantity supplied and an increase in demand, price goes up If you cannot increase supply in response to a higher pr

But the demand can change. Given a constant quantity supplied and an increase in demand, price goes up If you cannot increase supply in response to a higher price driven by higher demand, prices will increase even more See this Econ 101 chart [1]: Y axis represents price, x axis represents quantity. The lines represent simplified supply and demand curves (Wikipedia can explain why they are shaped as they are) Initial supply and demand is represented by supply "s" and demand "d". Their intersection gives us initial price "p1" and quantity produced "q1". If demand increases from "d" to "d2", normally suppliers would produce more to meet the new demand. So the price would increase to "p2" and quantity increase to "q2". So even here you get a price increase But with supply constrained assets like bitcoin, you can't increase quantity supplied to q2. So the only way the market can absorb new demand is by a further price increase. Basically more people want a good, but more can't be made, so sellers rationally realize they can charge more. In the chart, the new price would be the point where the dotted vertical line above q1 intersects with d2 [1] https://goo.gl/images/PT23GG https://goo.gl/images/PT23GG