Supply reduction refers to the decrease in the total amount of a cryptocurrency available in circulation. This can happen through various mechanisms, often designed to maintain or increase the asset’s value over time.One common method for supply reduction is halving, particularly seen in cryptocurrencies like Bitcoin. In this process, the block rewards miners receive for verifying transactions are cut in half at specified intervals. This reduction in new coins entering circulation decreases the overall supply, which can lead to increased demand and potential price appreciation.Another way supply can be reduced is through token burns, where a portion of coins is permanently removed from circulation. This action reduces the total supply and can create scarcity, often leading to a rise in value as fewer coins are available for trading.Supply reduction is a key strategy for many cryptocurrency projects to foster long-term value retention and incentivize investment, as it creates an environment of scarcity, crucial for maintaining investor interest and encouraging market stability.