If you are new to crypto world and have heard about bitcoin halvening (halving) these past few days and weeks, do not worry, bitcoin did not split itself or whatsoever.
One of the most notable characteristics of bitcoin is that there is a limit on the number of coins that will ever be available, 21,000,000 to be exact. It is embedded into its code making it inevitable. The production of new bitcoin can be predicted precisely and is clear to everyone. This is distinct from the banking system, where fundamental banks can print infinite money. To know what is Bitcoin halving is, you must first understand that new Bitcoin are issued as a prize for miners whenever they mine a block. Yes, like gold, bitcoin is mined by miners. (I will have other article explaining this)
Market and price of course is affected by supply and demmand. If demand remains the same, an increase in supply apparently lowers the price. This suggests that if demand remains steady, the price would have to decrease more slowly after halving (supply growth will be halved).
However, varying demand motivated by emotions and the psychology of market professionals in the crypto market is by far the aggressive market power. There is a common feeling that lowering the supply raises the price. The so-called stock-to-flow ratio appears to leave no doubt that there is a bond between the halving of the block reward and the rising price. This view is somewhat unilaterally expressed in the media, which of course raises demand, as everyone wants to benefit from the probably safe price increase. The prophecy fills itself.
An important symbol for the Bitcoin Halving will be the expected price evolution of Litecoin. If the cryptocurrency of the Halving continues to rise, it will fuel the Halving hype surrounding Bitcoin. If that is not the case and more likely to lose value, it could upset the collective belief in the stock-to-flow theory. Because if one governs the crypto market, then it is the emotions and collective psychology of market participants, not market theories.
Bitcoin investors strictly follow Bitcoin’s halving periods, as every halving decreases the supply of newly-minted BTC enrolling the market, making it rarer. In theory, this should have a profitable influence on the value of BTC, and Bitcoin’s price tale gives importance to this hypothesis, although you have to remember that you are bargaining with a sample size of 2. In any event, it is challenging to create a situation where a Bitcoin halving operates as a negative impact on the value of BTC.
At block # 630,000, bitcoin halved it’s reward for miners to 6.25 bitcoin per block. This means, 18,375,000 bitcoins will be mined and inflation will fall to ~ 1.79/year
ADDITIONAL
In Litecoin a Halving is in the month of August. This is the second half of the block reward on Litecoin, which is 12.5 LTC. Litecoin has a four times higher inflation than Bitcoin because the block time is 2.5 minutes instead of 10 min
