Bitcoin halving is a process within the cryptocurrency’s protocol that cuts the reward for mining new bitcoins in half every 210,000 blocks, or approximately every four years. This mechanism is part of the design by Bitcoin’s creator, Satoshi Nakamoto, to ensure that only a finite number of bitcoins, specifically 21 million, will ever be in circulation. The halving aims to control the inflation of new coins into the market. The next halving event is scheduled to occur soon in the US and UK, reducing the mining reward from 6.25 bitcoins to 3.125 per block. This halving process will continue until the total limit of 21 million bitcoins is reached, which is projected to happen in the year 2140.
While the long term effects are not questioned, on a shorter time window looks like that the combination of mass adoption due to cash bitcoin ETFs and expectation of halving have contributed to an overshooting effect. Since the middle of March Bitcoin lost more than 10,000 USD or the 18%, but managed to remain in the lower side of a bearish channel. Making lower highs from the top is not encouraging but a worse scenario would be a drop below the lower side of the channel. Today the cryptocurrency is gaining ground , up 2.07%, and if during the next weeks a bullish leg would trigger a breakout of the higher side BTCUSD would be able to make a new record high. Moderate negative sentiment if Bitcoin stays in the channel , deteriorated only by a bearish leg beneath it.
The halving of Bitcoin is designed to cut the production of new bitcoins, which could potentially drive up the price if demand remains consistent. This economic principle suggests that a reduced supply of an asset, when accompanied by steady demand, should lead to an increase in its price.
