Previous halvings have resulted in sharp price increases and severe market volatility for bitcoin and other cryptocurrencies, as traders and miners adjust to the new production limitations of the world’s most valuable virtual currency.
The halving in 2012 saw bitcoin’s value shoot up by 80 times, while the 2016 halving preceded a 300 per cent rise in bitcoin’s value. The simplest explanation for these price increases is the basic economic principle of supply and demand: if the supply suddenly drops but demand stays the same, the price will inevitably rise. But the decentralised and semi-anonymous nature of bitcoin means it is difficult to attribute specific gains or losses to a specific event.
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