What to know:
- IBIT fell 5.3% Monday as Google announced a quantum computing chip.
- Though impressive, the new chip is not fast enough to compromise bitcoin security.
- Still, IBIT’s chart now shows a bearish price pattern.
As a seasoned crypto investor with a decade-long journey under my belt, I have learned to navigate through the rollercoaster ride that is the cryptocurrency market. Today, I find myself grappling with the latest dip in IBIT’s price, triggered by unfounded fears of quantum computing compromising bitcoin security.
On Tuesday, the BlackRock-backed Bitcoin (BTC) exchange-traded fund (ETF), known as IBIT on Nasdaq, experienced a decline due to the crypto market showing signs of cooling and widespread speculation that bitcoin’s security might be threatened by advancements in quantum computing. This fear has been circulating through various social media platforms.
In a significant decline, IBIT’s price dropped by 5.3% to reach $54.73 – the largest one-day fall since early August, based on data from Investing.com. Meanwhile, Bitcoin also tumbled by over 4%, dipping below $94,300, due to altcoin traders with excessive leverage being forced out of their positions, causing a ripple effect and increasing losses across the market.
In a typical bull market, pullbacks like the one on Monday are common. However, this dip is particularly significant because it occurred alongside Google’s announcement of its Willow quantum-computing chip, which can solve a problem in five minutes that would take the world’s fastest supercomputers 10 septillion years to process.
Multiple individuals using platform X have voiced worries about Willow potentially solving Bitcoin’s intricate SHA-256 math, potentially threatening the network’s security. This is due to the fact that Willow has reached 105 quantum bits (qubits) with reduced errors. A qubit serves as a highly potent variant of a standard computer bit, capable of being both 0 and 1 simultaneously. In simpler terms, a qubit behaves like a switch that can be on or off until it’s toggled. This ability allows quantum computers to process problems significantly faster compared to traditional computers.
According to some experts, these worries are unnecessary as Willow doesn’t yet possess the power to potentially be harmful at this point.
According to the anonymous analyst and tech expert known as Cinemad Producer, who spoke on X, Willow has 105 quantum bits (qubits), an impressive number for conducting quantum experiments. However, this is significantly less than what’s required to compromise Bitcoin’s encryption. In fact, it’s been estimated that approximately a million high-quality qubits would be needed to even begin threatening Bitcoin’s security.
In the year 2022, a study conducted by Universal Quantum, linked with the University of Sussex in the United Kingdom, revealed that a quantum computer possessing approximately 1.9 billion quantum bits (or qubits) would have the potential to crack Bitcoin’s encryption code.
Damage done?
It appears uncertain if quantum FUD caused Bitcoin (BTC) and IBIT to fall, but based on technical chart analysis, it seems that harm may have already occurred.
On Friday, IBIT reached an all-time peak; however, the 14-day Relative Strength Index (RSI) suggested a potential bearish divergence, which could indicate that the current upward trend may be losing momentum.
On Monday, the downward trend I had observed was further validated by the bearish divergence, suggesting potential for more losses in the near future. The critical support level I identified lies at $51.54, a low point from November 26th. For this bearish outlook to be reversed, a significant jump above the high of $59.16, recorded on Thursday, would be required.
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2024-12-10 13:47