LONDON, April 19 (Reuters) - Bitcoin's long-anticipated

'halving' is, depending on where you sit, a vital event that

will burnish the cryptocurrency's value as an increasingly

scarce commodity, or little more than a technical change talked

up by speculators to inflate its price.

The halving comes after bitcoin hit an all-time high of

$73,803.25 in March.

But what exactly is the halving, and does it really matter?

WHAT IS IT?

The halving, which happens roughly every four years, the latest

of which is expected this week, is a change in bitcoin's

underlying blockchain technology designed to reduce the rate at

which new bitcoins are created.

Bitcoin was designed from its inception by its pseudonymous

creator Satoshi Nakamoto to have a capped supply of 21 million

tokens.

Nakamoto wrote the halving into bitcoin's code and it works

by reducing the rate at which new bitcoin are released into

circulation.

So far, about 19 million tokens have been released.

HOW DOES IT HAPPEN?

Blockchain technology involves creating records of

information - called 'blocks' - which are added to the chain in

a process called 'mining'.

Miners use computing power to solve complex mathematical

puzzles to build the blockchain and earn rewards in the form of

new bitcoin.

The blockchain is designed so that a halving occurs every

time 210,000 blocks are added to the chain, roughly every four

years.

At the halving, the amount of bitcoin available as rewards

for miners is cut in half. This makes mining less profitable and

slows the production of new bitcoins.

(For a visual explanation of how blockchain works,

click here

.)

WHAT HAS IT GOT TO DO WITH BITCOIN'S PRICE?

Some bitcoin enthusiasts say that bitcoin's scarcity gives

it value.

The lower the supply of a commodity, all other things being

equal, the price should rise when people try and buy more.

Bitcoin is no different, they argue.

Others dispute the logic, noting that any impact would have

already been factored in to the price.

The supply of bitcoin to the market is also largely down to

crypto miners but the sector is opaque, with data on inventories

and supplies scarce. If miners sell their reserves, that could

pressure prices lower.

Since hitting record highs last month, bitcoin's price has

sunk below $64,000. JP Morgan analysts said this week they

expect the price to fall further after the halving.

Establishing the reasons for a crypto rally is also hard,

not least as there is far less transparency than in other

markets.

The most common reason given for this year's surge is the

U.S. Securities and Exchange Commission's January approval of

bitcoin ETFs, and expectations that central banks will cut

interest rates.

But in the speculative world of crypto trading, explanations

for price changes can snowball into market narratives that

become self-fulfilling.

WHAT ABOUT PREVIOUS HALVINGS?

There's no evidence to suggest that previous halvings have

been behind bitcoin's subsequent price rises.

Still, traders and miners have studied past halvings to try

and gain an edge.

When the last halving happened on May 11, 2020, the price

rose around 12% in the following week and 659% in the following

12 months.

But there were many explanations for the rally - including

loose monetary policy and stay-at-home retail investors with

spare cash - and no real evidence the halving was behind it.

An earlier halving occurred in July 2016. Bitcoin rose

around 1.3% in the following week, before plunging a few weeks

later and then rallying.

In short: it's hard to isolate the impact, if any, halvings

may have had previously or predict what could happen this time

around.

Regulators have repeatedly warned that bitcoin is a speculative

market driven by hype and one that poses harm to investors.