BlackRock's Bitcoin ETF Sees Largest Drop in Four Months Due to Quantum Computing Concerns
The IBIT exchange-traded fund from BlackRock experiences a significant loss amidst fears over quantum computing's impact on bitcoin security.
Key Points:
- On Monday, IBIT fell by 5.3% following Google's announcement regarding a quantum computing chip.
- Despite being an impressive technological feat, the new chip does not pose a threat to bitcoin's security at this time.
- The recent market behavior shows a bearish trend in IBIT's price.
BlackRock's spot bitcoin exchange-traded fund (ETF), identified as IBIT on Nasdaq, declined on Tuesday as the cryptocurrency market cools and concerns about potential threats to bitcoin’s security from quantum computing circulated on social media.
IBIT fell 5.3% to $54.73, marking the largest single-day decline since early August, according to Investing.com. Bitcoin itself dropped over 4%, with prices slipping below $94,300, triggering significant liquidation among highly leveraged altcoin traders.
Although pullbacks like this are common in a bull market, the latest drop is noteworthy since it coincided with Google introducing its Willow quantum-computing chip, capable of solving complex problems in an unprecedented manner.
Some users expressed fears on X that the Willow could potentially bypass bitcoin's SHA-256 algorithm, posing serious risks to the network. However, experts argue that Willow currently lacks the computational power necessary to undermine bitcoin's encryption.
A pseudonymous tech analyst stated, "Willow has 105 qubits, which is great for quantum experiments but far from what's needed to break Bitcoin's encryption. Experts estimate you’d need about 1 million high-quality qubits to impact Bitcoin’s security."
Additionally, a study from Universal Quantum suggested that a quantum computer would require a staggering capacity of 1.9 billion qubits to effectively compromise bitcoin encryption.
What’s Next?
While it is still uncertain if the fears around quantum computing are driving IBIT and bitcoin prices lower, technical analyses indicate that a bearish trend may be developing. IBIT previously reached a record high just days prior. Meanwhile, significant losses could continue if further support isn’t found around $51.54, the low recorded on November 26.
