Supply of Bitcoin's Taproot Addresses Dips Amid Quantum Computing Concerns

Bitcoin’s Taproot address supply has dropped approximately 3% since January 2024, as reported by on-chain analyst Willy Woo.

The reduction has spurred discussions within the crypto community, with experts divided on whether long-term holders are liquidating assets or merely rearranging investments due to new concerns over quantum computing.

Bitcoin Housecleaning vs. Whale Sell-Off?

Data from Woo indicates that the number of Taproot addresses, Bitcoin’s newest transactional format, has been decreasing since 2024 began. Woo contends that this might not indicate a panic sell-off but is more likely a form of ‘housecleaning’ from early adopters, who are transferring BTC to safer or custodial environments.
‘What qualifies as an ‘OG dump’ is just BTC moving from an address that hasn’t been touched for seven years,’ Woo remarked, adding that on-chain data can misinterpret such movements as selling, while they often signify reorganization or collateral positioning.

Conversely, others in the field, including Charles Edwards from Capriole Investments, argue that significant movements from early Bitcoin holders typically correspond with upward pressure on selling. ‘We know this empirically,’ said Edwards, referencing various on-chain data illustrating substantial quantities of older BTC being transferred in 2025.

Other experts backed Woo’s position. On-chain analyst Shanaka Anslem Perera pointed out that around 470,000 BTC, valued at around $50 billion, has been pulled from dormancy this year. However, much of this involves transitions related to custody management rather than outright market sales. ‘This isn’t a capitulation story,’ Perera stated, ‘but rather an evolution in custody, collateral management, and an institutional approach.’

Quantum Computing Fears Prompt Custody Management Changes

The timeline of these Taproot address withdrawals overlaps with escalating fears regarding Bitcoin’s long-term viability against quantum computing advancements. In July 2025, developers proposed ‘P2QRH’, a quantum-resistant address type aimed at shielding up to 4 million susceptible BTC, approximately 25% of the supply, from potential key exposure risks.

The urgency surrounding these issues intensified after Project Eleven commenced its Q-Day Prize challenge in April, offering 1 BTC to anyone successful in deciphering Bitcoin’s cryptography using Shor’s algorithm before April 2026. The project is designed to determine if real quantum hardware can breach Bitcoin’s elliptic curve encryption.

In response, hardware manufacturers are also taking action. Trezor, for instance, revealed the Safe 7 wallet in October, being its first ‘quantum-ready’ self-custody product.