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What is bitcoin halving?
It’s when the amount of bitcoin awarded for mining is cut in half. Mining is a metaphor for how bitcoin goes into circulation — put simply, computers run formulas to verify the code that keeps bitcoin transactions secure, and get shiny new bitcoin as a reward for their work. The reward is currently 6.25 bitcoin and will be cut to 3.125.
Why does halving happen?
Supply and demand, baby! Halving controls how much bitcoin is available to the public, which theoretically keeps demand steady and prevents excess coins from diluting bitcoin’s value. This is built into bitcoin’s code to happen roughly every four years, and the next one is expected in the next few days.
Does that mean bitcoin is about to be worth more?
Maybe. Prices went up after the three previous halvings, but to different degrees. Three events is a small sample size, so it’s unclear if the growth was due to halving, or any of the other things that send bitcoin’s volatile prices in either direction. Some are really pessimistic about this halving, like JPMorgan, which predicted a dip of about a third, based on its most recent reporting.
Why would the price drop?
A lot is different this time around. For one, bitcoin hit a new high a month before halving, thanks to ETFs hitting the market, and no one knows if prices can climb further. Also, traders who bought into ETFs might try to cash in on the excitement for halving and trigger a sell-off. There’s also way more economic and geopolitical uncertainty. In any case, these things play out over months, so don’t expect the change to be immediate.