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The halving reduces block rewards from 6.25 to 3.125 Bitcoin, roughly halving the rate of new supply entering circulation. This mechanism is embedded in Bitcoin’s code to control inflation and incentivize miners.
Previous halvings have historically had profound effects on supply and demand dynamics. The initial halving decreased the circulating supply by approximately 17% and contributed to subsequent bullish momentum. Future halvings will continue to reduce the inflation rate, emphasizing scarcity—a key driver in Bitcoin’s value proposition.