The Bitcoin Halving only happens every four years or so, or every 210,000 blocks to be precise. Coded into the protocol by Satoshi Nakamoto, and it’s obvious the pseudonymous Bitcoin creator had this supply squeeze in mind.
Each Halving cuts Bitcoin’s inflation rate, and now with Bitcoin’s set at 1.8% it’s below that of most western countries’ average inflation rates.
This Halving was the most highly anticipated occasion in Bitcoin’s short history, but now with the new stockpile being cut in half, what effect will this have on the supply and demand side of things?
Supply and Demand
The laws of supply and demand defines the interaction between the sellers and buyers of a resource, in this case Bitcoin. It will determine what effect the relationship between the availability of Bitcoin and the desire for it will have on its price. If there’s a low supply, and a high demand then that will reflect in a higher price.
And with the Bitcoin block reward being cut in half, although it isn’t a 50% cut in the whole supply, it’s led many believe a potential increase in the price. Less supply should have a positive effect on the price, no?
But a supply shock doesn’t necessarily reflect in an immediate boost. Read more ..