Bitcoin’s total supply is capped at 21 million coins, a fundamental feature meant to create scarcity. Periodic halving events, where new BTC issuance is cut in half, reduce the rate at which new coins enter circulation. Historically, these halvings have supported long-term price appreciation by tightening supply relative to demand. However, demand isn’t constant; it fluctuates with investor sentiment, macro conditions, and adoption rates. When demand weakens sharply, prices can fall significantly, even in the face of capped supply.
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