BlackRock’s Bitcoin ETF (IBIT) dropped 5.3% on Monday, marking its biggest single-day decline since early August. The downturn coincided with a cooling crypto market and rising concerns, fueled by social media, about quantum computing potentially compromising Bitcoin’s security.
IBIT’s price fell to $54.73, driven by a more than 4% drop in Bitcoin, which slid below $94,300. This downturn was amplified by the liquidation of overleveraged altcoin positions, contributing to broader market losses. While pullbacks are common in bull markets, Monday’s drop was particularly notable due to the timing of Google’s announcement regarding its Willow quantum computing chip. Willow, which is capable of solving a problem in five minutes that would take the world’s fastest supercomputers 10 septillion years to solve, raised alarms on social media. Several users on X expressed fears that Willow’s advancements could potentially crack Bitcoin’s SHA-256 encryption, threatening the security of the network.
However, experts have dismissed these concerns as unfounded. Willow, with its 105 qubits, is not yet powerful enough to break Bitcoin’s encryption. Tech analyst and pseudonymous expert Cinemad Producer explained on X, “While Willow’s 105 qubits are impressive for quantum experiments, experts believe around 1 million high-quality qubits would be needed to compromise Bitcoin’s security.”
Further research, including a 2022 study from Universal Quantum, affiliated with the University of Sussex, indicated that a quantum computer with 1.9 billion qubits would be required to break Bitcoin’s encryption.
Although the quantum computing concerns are largely unfounded, the market response seems to have been significant. According to technical charts, IBIT’s recent gains appear to be running out of momentum. The 14-day relative strength index (RSI) showed a bearish divergence, signaling that the rally might be losing steam. Monday’s drop confirmed this divergence, suggesting that deeper losses could be ahead. IBIT’s next support level is at $51.54, the low from November 26, while a rise above $59.16 would be needed to reverse the bearish outlook.
