BlackRock’s spot bitcoin (BTC) exchange-traded fund (ETF), tickered IBIT on Nasdaq, dropped on Tuesday as the overheated crypto market cooled and unfounded concern that bitcoin’s security might be compromised by quantum computing percolated across social media.
IBIT’s price fell 5.3% to $54.73, the biggest single-day drop since early August, according to data source Investing.com. The bitcoin price fell over 4%, hitting lows under $94,300, as overleveraged altcoin traders were liquidated, leading to bigger losses in the broader market.
While such pullbacks are typical in a bull market, Monday’s losses are noteworthy because they came alongside Google’s announcement of its Willow quantum-computing chip, which can solve in just five minutes a problem that would take the world’s fastest supercomputers 10 septillion years to process.
Several users on X expressed concerns that Willow could easily crack bitcoin’s complex math SHA-256, compromising the network. That’s because Willow has reached 105 qubits with improved error rates. Consider qubit a super-powerful version of a regular computer bit, which can only be a 0 or a 1. A qubit can be both 0 and 1, like a switch that can be on and off until it’s checked. This helps quantum computers process problems much faster than normal computers.
These concerns are unfounded, some experts said, because Willow is still not powerful enough to pose a risk.
“Willow has 105 qubits, which is great for quantum experiments but far from what’s needed to break Bitcoin’s encryption,” pseudonymous analyst and tech expert Cinemad Producer producer said on X. “Experts estimate you’d need about 1 million high-quality qubits to make a dent in Bitcoin’s security.”
In 2022, research from Universal Quantum, associated with the University of Sussex in the U.K., found that a quantum computer with a capacity of 1.9 billion qubits would be required to break bitcoin’s encryption.
Though it’s unclear whether the quantum FUD drove BTC and IBIT lower, the damage seems to have been done, according to technical charts.
While IBIT clocked a new high on Friday, the 14-day relative strength index (RSI), hinted at a bearish divergence, a warning that the rally is running out of steam.
Monday’s drop confirmed the bearish divergence, signaling deeper losses ahead, with support at $51.54, the Nov. 26 low. A move above Thursday’s high of $59.16 is needed to invalidate that outlook.
