Scarcity and demand are interdependent. An increase in demand can reduce availability, but it also incentivizes production, which can increase supply. This dynamic stabilizes prices and availability over time.
Discussion
Unless it is Bitcoin .. inelastic scarcity
Supply is not the total quantity of money.
If demand increases, price increases, and more plebs sell their sats, which means supply increases.
Different dynamic than production. Price going up does incentivize production in everything else as you say which dampens and stabilizes dramatic upward price movement in those other things. That mechanism is *not* present in Bitcoin because of the difficulty adjustment. The emission schedule is essentially set, which leaves only price to compensate for any increase in demand - not increased production. Drawing more of the already existing coins into the market is not production.