Bitcoin “doesn’t trade on fundamentals, but supply and demand.” The previous point was made in a recent column meant to explain the surging value of the most prominent crypto concept.

In the same column penned by Giedre Valaviciute, he cited a response from an investor who’s made millions on bitcoin. Asked why he put money into it, the multi-millionaire observed that “It’s the only commodity in history that doesn’t have a supply response to rising prices.”

The responses from Valaviciute and the unnamed investor are some of the usual ones from those who own BTC, or who aim to explain the phenomenon. The obvious problem is that the common explanations don’t square with the coin’s price history.

No doubt the coin is at all-time highs right now, but that’s precisely the point. There have been lots of bear markets for bitcoin too, thus raising the obvious question: if a limited supply is what makes it such a great investment, why all the stretches when the price of the coin was in decline?

All of which raises further questions. Per Valavaciute, bitcoin once again “doesn’t trade on fundamentals.” No it doesn’t. Which means those who own the coins solely own a speculation. There’s nothing more. What do bitcoin owners think they own?

Some will no doubt repeat once again that they own something that is finite in supply, and that the limit in supply means they own something that can only go up. Ok, but if so, what do they really own? Think about it. And in thinking about it, it should be said with certitude that those who feel fortunate enough to own bitcoin (and surely many feel this way) don’t really own money or a coin. Money’s worth is in what it can buy, but bitcoin owners logically wouldn’t use it to buy things.

Evidence supporting the above claim can be found in the stated belief by bitcoin owners and commentators that the so-called coin doesn’t trade on fundamentals, but instead supply and demand such that it can only become more valuable. But if the value of the coin is only going up, then it’s not money. Really, who would buy with a monetary medium that, once exchanged for fiat money, market goods or both, will soon enough be worth much more than it was when used to make the purchase of fiat money, market goods, or both?

To which some might say that demand for that which is finite won’t always remain constant such that there will be bitcoin bear markets too. Ok, but isn’t the point of bitcoin that it doesn’t trade on fundamentals, but instead supply and demand? Based on that, what are the “non-fundamentals” that would cause bitcoin to decline in value? And if a coin that doesn’t trade on fundamentals is in decline, who might exchange money, market goods or both for that which is in slow or rapid decline?

It brings to mind the individual (no doubt one of many) who made millions on BTC, and his point that bitcoin is “the only commodity in history that doesn’t have a supply response to rising prices.” Well, that’s true. But is there a supply response to falling prices? One guesses falling prices might attract sellers, but to be fair, falling prices would no doubt attract some buyers eager to get what’s limited in supply at a lower price.

Except that it remains unexplained what buyers are getting assuming they buy at falling prices. Without fundamentals at work, and with limited supply supposedly what imbues bitcoin owners with gold-plated insurance against price declines (where have you heard that one before?), it seems buyers and owners are getting a speculation based on nothing, one that if it lives up to its billing will never be an exchange medium as much as it will remain a speculation that there will always be buyers of what’s limited in supply.

Which is all well and good. Live and let live, as they say. Would it that we’d all bought bitcoin in the early days, during a bear market, or both.

Still, it’s worth pointing out that fundamentals are at work with bitcoin, and they’re rooted in the hope that there will always be a market for something limited in supply, and that for being limited in supply, can’t ever fulfill the purpose of money; money being money for what it commands in the marketplace. The problem is that bitcoin isn’t money, and we know it’s not because its owners tell us it’s not.