Does Bitcoin's limited supply guarantee a rising price?
Correct answer
Answer D: No, the price still depends on supply and demand.
Quick explanation
Scarcity alone does not create demand. If demand changes, the price can rise or fall even though the issuance rules stay the same.
Detailed explanation
If a form of money's supply can be expanded arbitrarily, each existing unit's relative share can fall. Bitcoin limits this monetary dilution through a publicly known issuance schedule and a maximum total supply of around 21 million bitcoin.
The limit is not secured by one body's promise. Full nodes check consensus rules and reject blocks creating more new bitcoin than permitted. No individual issuer can therefore expand the money supply at their discretion.
Scarcity does not prevent every loss of value, however. Bitcoin's market price and purchasing power can fall if demand, acceptance, use or liquidity declines, or if technical, legal and economic risks are assessed differently. Sharp price fluctuations also remain possible.
Bitcoin's limited supply therefore protects against one particular potential cause of depreciation: arbitrary multiplication of new units. Whether it preserves value over time also depends on demand, usability, security, transferability, verifiability and continued acceptance of the rules.
Example or everyday application
A system has 100 units. If an operator can issue another 100 at any time, each existing unit's relative share of total supply falls. Bitcoin's fixed issuance schedule prevents such arbitrary expansion. But if demand falls, the market price can still decline.
Common misconception
The 21-million cap prevents neither price losses nor every loss of purchasing power. Under current rules, it protects against arbitrary expansion of Bitcoin's supply.
What the sources support
OpenStax explains that prices arise from supply and demand. Bitcoin sources document limited issuance; that scarcity is only a supply condition and cannot substitute for absent or falling demand.