BlackRock’s bitcoin exchange-traded fund (ETF) IBIT saw a significant drop in price on Tuesday as the cryptocurrency market cooled down. This drop came amidst concerns circulating on social media that bitcoin’s security could be compromised by quantum computing. IBIT’s price fell 5.3% to $54.73, the largest single-day drop in months. The overall bitcoin price also fell by over 4%, falling below $94,300 as overleveraged altcoin traders were liquidated, causing losses in the broader market.
The concern about quantum computing arose after Google announced its Willow quantum-computing chip, which has the ability to solve complex problems much faster than traditional supercomputers. Some users expressed worries that Willow could potentially crack bitcoin’s security encryption, as it has reached 105 qubits with improved error rates. However, experts argue that Willow is still not powerful enough to pose a real threat to bitcoin’s security. Research done by Universal Quantum in 2022 suggested that a quantum computer with 1.9 billion qubits would be needed to break bitcoin’s encryption.
Despite the debate surrounding the potential risk posed by quantum computing, the damage to bitcoin and IBIT seemed to have already been done. Technical charts indicated a bearish divergence, suggesting that the rally may be losing momentum. IBIT’s daily chart showed a new high on Friday, but the 14-day relative strength index (RSI) pointed to potential deeper losses ahead, with support at $51.54, the Nov. 26 low. To invalidate this outlook, a move above Thursday’s high of $59.16 would be necessary.
While the concerns about quantum computing and its impact on bitcoin’s security have caused some fluctuations in the market, it is important to note that experts believe the current technology is not advanced enough to pose a real threat. The recent drop in price for IBIT and bitcoin could be attributed to various factors, including overleveraging in the altcoin market and broader market trends. As the cryptocurrency market continues to evolve, it will be crucial for investors to stay informed about potential risks and developments in technology that could impact the security and stability of digital assets like bitcoin.
