Halving is a phenomena exclusive to Bitcoin, where on a cycle of 4 years, the number of bitcoins given as a reward for successfully mining a new block is reduced by half. This means every 4 years, miners get a 50% reduction in their rewards.
Satoshi had initially set 50 bitcoins as the reward for being the first to mine and add a new block to the blockchain. Halving the number of bitcoins received as a reward will continue after an interval of 210,000 blocks until the last bitcoin will be mined, projected to be the year 2140. The last halving for Bitcoin was on 11 May 2020, at around 3 pm, with the reward dropping to 6.25 bitcoins from 12.5.
Halvings generally cause a steep rise in Bitcoin’s value due to a bullish market trend. Bitcoin’s price went up to $20,000 after halving from $650, and then settled down to $3,200 as the year progressed. The idea of halving is to ensure inflation in Bitcoin’s economy, as the reduced supply of Bitcoins (capped at 21 million) causes greater demand and subsequently higher prices and incentive for miners to keep mining Bitcoin. However, this also leads to a very volatile market that encourages speculation and unpredictability.