Part 2/8:
The price of any item in a free market, including Bitcoin, is driven by two critical factors: its availability (supply) and demand from potential buyers. To clarify this, we can visualize a typical demand curve for products traded in the market. A standard demand curve slopes downward, indicating that as prices drop, more consumers are inclined to purchase the product.
The vertical (Y-axis) of this graph represents the price of Bitcoin in US dollars, while the horizontal (X-axis) represents the quantity demanded. By surveying how much of an item people are willing to buy at different price points, we can derive the average demand curve.