If there's no panic(or bubble, or special events), it will gradually forces the price higher. You'll not see a big difference on a small period, but on a longer period, it will affect the price.
It will probably cause a bunch of miners to lose their profitability, and my guess is that some will quit the market. If miners quit the market, it will force the difficulty down, giving more Bitcoins to those who stay, helping them stay profitable.
But it could also create a panic. "Oh my god, there's going to be less Bitcoins, let's buy them!" sort of thing. In that case, well, everything can happen.
My call? My entire being except my instinct tells me that there will be no panic. My instinct tells me that people are going to freak out and create Bitcoin Bubble 2.
Topic: What happens when the block reward halves to 25? - page 5. (Read 12842 times)
This is one instance where there's an argument for alt block chains, if for no other reason than to give us an idea of how the chain behaves when you diminish the reward. A quick look at the history of prices of SolidCoin when it reduced block rewards tells us that the price of each coin increases whenever this happens. I'm uncertain whether you can draw any parallels about the exact ratio of block reward reduction and market price though.
Sometime later this year, the block reward will halve to 25. Assuming half the freshly mined btc is sold for fiat(as the poll of a tiny sample seems to show) that represents a supply of 3600btc/day to be sold for fiat. (this will be halved this year). The total daily transaction volume at MtGox and tradehill combined is roughly 100,000., varying quite a bit. Assuming miners will still sell half their mined btc and trade volume will still be 100,000, this means that when the change happens, the supply of btc will drop by only 1.8% or less. In other words, the price should not change that much. However, miners will have their revenue drop by 50% If one's mining ops is not making much money before the change, it will be a money-losing proposition for most, unless something else changes or I am simply wrong. Penny for your thoughts.....
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