Source: Tom Fisk
What determines the value of an asset?
"Many things", is a common short answer to this question and while it's true, let's discuss the two factors I find most important for sustainable growth, where real supply and demand dictates the price of an asset.
Supply and Demand
This is, in my opinion, one of the most decisive factors for the sustainable growth of an asset. Speculation plays a significant role in creating liquidity of an asset, rarely resulting sustainable growth in price.
Without any intervention, the law of supply and demand suggests that the demand of an asset increases as the supply decreases and inversely, decreases as the supply increases. In other words, the demand will be lower at a higher price (Surplus) and higher at a lower price (Shortage).
I think it's very important to note here that an enormous supply is not an Achilles heel for an asset that has a fixed max supply with a good product and usecase. What's important is the percentage of the supply you own and the marketcap at your average entry point. I.e. 1 out of 100 is the same as 10 out of 1000
Effective Marketing
Marketing creates awareness and external interest in a product, this is very important in a competitive and constantly evolving industry. With so many projects competing against each other, many good projects go unnoticed as a result of poor marketing.
It's been proven countless times, good marketing is the best way to survive a flooded market; when the demand for diamonds were on a decline, De Beers launched what is one of the most successful marketing campaigns the world has ever seen - The "A Diamond is Forver" campaign
The brilliant concept was to create an emotional link to diamonds, the sentiment being love, like diamonds, is eternal.