The crypto market went through a massive selloff in the past day, with over $1.7 billion worth of positions liquidated. Bitcoin, which crossed the $100,000 mark, was trading at $94,100 and Ethereum lost 8% to trade below the $3,800 mark. According to Coinglass, the selloff led to a 7.5% decrease in the total market capitalization of the crypto market.
From the total liquidations of $1.7 billion, $168 million were from short positions and $1.5 billion from long positions. This large sell-off impact almost all of the cryptocurrencies listed here. Bitcoin has since come back a little to trade at just above $97,100 but still down by 2.55% in the last one day. Other cryptocurrencies are still down, with the majority of them declining by at least 10%.
Out of the top ten cryptocurrencies, Ripple (XRP), Dogecoin (DOGE), and Cardano (ADA) took the biggest hit. XRP shed 11% of its value, DOGE declined by 10%, and ADA by a massive 13%. Traders were looking for the reasons for the pullback in the market as the market correction affected most parts of the market. However, it has not been possible to single out a particular cause; there are several events that may have contributed to the failure.
Bhutan’s Bitcoin Transfer Impact
The first is the notorious transfer of Bitcoins made by the Royal Government of Bhutan in recent times. Singapore-based digital asset firm QCP Capital received 406 BTC from Bhutan as per Arkham Intelligence. The transfer made in several batches and an additional $19 million worth of BTC was sent to a wallet linked to Binance. The cause of these transfers is still unknown, possibly, they led to the increased pressure on the market.
Bhutan, which has earned the reputation of mining Bitcoin using hydroelectricity, is among the biggest government holders of BTC in the world. The country has currently 11,688 Bitcoins in its possession which is equivalent to nearly one billion dollar. Although Bhutan sold 367 Bitcoin for $33.5 million last month, the country’s BTC reserves remain among the world’s top five.
Willow Chip and Bitcoin’s Security
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One more event that can be associated with the market shift is the presentation of the new Google quantum computing chip – ‘Willow’. The chip can solve problems in under five minutes, which would take an estimated 10 billion years for a conventional supercomputer.
With the rapidly evolving quantum computing there are concerns that such technologies can one day crack the Bitcoin’s encryption. Analyst Debra Robinson said that up to $3.6 trillion in cryptocurrency assets are at risk of being stolen in the future. Quantum computing experts still maintain that quantum computers are not a threat to BTC at present.
Quantum Computing’s Impact on Bitcoin
According to Kevin Rose, a partner at True Ventures, it can take a quantum computer with 13 million qubits to break Bitcoin in 24 hours only. At the moment, Google’s Willow chip has only 105 qubits. However, this is still not yet enough to pose a threat to BTC as a quantum computer.
Bitcoin entrepreneur Ben Sigman chimed in to assure the community that the security of Bitcoin is still very much sound. He pointed out that SHA-256 algorithm applied in the BTC cryptography would still be hard to crack even with the development of quantum computing. “Bitcoin’s cryptography remains SAFU… for now,” Sigman said, noting that for the time being, Bitcoin is safe from quantum threats.
The following factors are still at play and therefore the market is still uncertain. The recent liquidation event has created some doubt as to the future of cryptocurrencies, especially Bitcoin. Although the BTC is constantly fluctuating, most experts still continue to hold a positive view on the future of the cryptocurrency.
Traders are now focusing on the movement of the price and are expecting more decline or gain of the price. Quantum computing’s potential in the future of cryptocurrency is still not very well defined and many people believe it will be a long time before quantum computers can pose a threat. The market is still trying to bounce back from this sharp correction and BTC and most other major cryptocurrencies are also holding up well.
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The price predictions and financial analysis presented on this website are for informational purposes only and do not constitute financial, investment, or trading advice. While we strive to provide accurate and up-to-date information, the volatile nature of cryptocurrency markets means that prices can fluctuate significantly and unpredictably.
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