Bitcoin Crash: Kevin O’Leary Warns of Quantum Computing Threat

TLDR

• Kevin O’Leary warns that Bitcoin’s price drop is just one part of a larger issue.
• O’Leary emphasizes that quantum computing could threaten Bitcoin’s cryptographic security.
• Institutional investors are now more selective, focusing on Bitcoin and Ethereum over smaller tokens.
• Despite Bitcoin’s long-term potential, O’Leary believes institutions will limit exposure to 3% until quantum concerns are resolved.
• Christopher Wood, a strategist at Jefferies, removed Bitcoin from his portfolio due to quantum computing risks.

Bitcoin’s price has dropped nearly 50% from its all-time high, but investor Kevin O’Leary believes the issue goes beyond the price decline. O’Leary points out that Bitcoin is facing a larger challenge as quantum computing technology advances. Although Bitcoin has survived past corrections, the rising risk of quantum computing is causing institutional investors to hold back.

Bitcoin Crash and Institutional Caution

Bitcoin’s market has faced several corrections, with the most recent one happening in October when the price of Bitcoin and other cryptocurrencies fell drastically. While many smaller tokens have failed to recover, Bitcoin and Ethereum have maintained a level of resilience. “If you want 90% of the upside and volatility in crypto, you only need Bitcoin and Ethereum,” O’Leary explained. The major change now is that institutional investors have become more selective, avoiding smaller tokens due to their volatility and lack of long-term potential.

O’Leary remains positive about Bitcoin’s future but suggests that institutional investors are hesitant to increase exposure. These investors are particularly concerned about quantum computing, which could potentially break the cryptographic security underpinning blockchain networks. While the threat remains speculative, it has caused institutions to limit Bitcoin investments to about 3% of their portfolios.

Quantum Computing as a Threat to Bitcoin’s Security

O’Leary highlighted that the rise of quantum computing is a growing concern for Bitcoin’s future. The possibility that a powerful quantum computer could eventually compromise the cryptographic systems used in Bitcoin is raising alarms among institutional investors. “Until that gets resolved, don’t expect them to go beyond a 3% allocation,” O’Leary said. The threat may not be immediate, but its potential is enough to slow down the adoption of Bitcoin by large investors.

Christopher Wood, a global strategist at Jefferies, also acknowledged the threat from quantum computing. Wood removed a 10% Bitcoin allocation from his model portfolio due to concerns about quantum advancements. This move reflects growing unease that quantum computing could undermine Bitcoin’s role as a reliable store of value.

In response to growing concerns about quantum computing, Bitcoin developers are working on improvements to the system. Last week, they took a step forward by merging Bitcoin Improvement Proposal 360 (BIP 360) into the official GitHub repository. While the proposal has not been implemented yet, it marks a significant effort to prepare for potential quantum threats.

BIP 360 introduces the Pay-to-Merkle-Root (P2MR) output type, designed to reduce exposure of public keys to quantum attacks. Unlike traditional formats like Pay-to-PubKey (P2PK) and Pay-to-Taproot (P2TR), which reveal public keys during transactions, P2MR keeps keys off-chain until necessary.

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