What does Bitcoin halving mean? What impact will it have on price?
Jul 01, 2025 am 09:51 AMBitcoin is a decentralized digital currency whose issuance mechanism is designed to have strict upper limits. This design ensures that the total amount of Bitcoin is limited, about 21 million. New Bitcoins are generated through the “mining” process where miners verify transactions and package them into the blockchain by solving complex computing problems. As a reward, the miners will receive a certain amount of new Bitcoins as well as transaction fees. This block reward is one of the important sources of Bitcoin supply.
What is Bitcoin halving?
1. Bitcoin halving is an event preset in the Bitcoin protocol that occurs approximately every four years, or more precisely, every 210,000 blocks mined.
2. At the time of this event, the miner's Bitcoin block rewards obtained by mining will be reduced by half.
3. This mechanism is a key component of the slowdown in Bitcoin issuance , which mimics the mining process of rare resources.
Why is Bitcoin halved?
1. Half is part of the design of Bitcoin creator Satoshi Nakamoto in its code.
2. Its core purpose is to control the issuance speed of Bitcoin so that it gradually decreases over time.
3. By halving, Bitcoin’s supply growth rate will drop periodically, which helps maintain its characteristics as a scarce digital asset.
The impact of halving on supply and potential prices
1. Half cuts directly affect the speed at which new Bitcoin enters the market.
2. Reduced supply is often seen as a factor that may affect asset prices , especially when demand remains stable or growing.
3. Economic fundamentals show that if the supply of a commodity falls, while other conditions remain unchanged, its price may be affected by upward thrust.
4. The halving event challenges mining profitability because it reduces the rewards for the miners to receive in half.
Observation of historical halving events
1. There have been several halving events in Bitcoin history, namely 2012, 2016 and 2020.
2. After each halving occurs, the supply growth rate of the Bitcoin market has declined.
3. Observe the historical price data and you can see that in the period after the past halving event, the price of Bitcoin has risen significantly .
4. These historical trends reflect the market's reaction in the supply reduction cycle, but the market is affected by a variety of complex factors.
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