Recently, Bitcoin prices have dropped significantly for nearly three consecutive days. Many people have deeply felt the intensity of this drop and have some understanding of the reasons:
First, let's look at the data and personal thoughts:
1. Bitcoin broke through $100,000 a few days ago, which can be said to be a milestone. In the past two days, it has dropped to over $90,000, leading to a 'liquidation' phenomenon. Many people lamented 'free fall', expressing that they no longer want to pay attention to the market as the coins they hold have almost all depreciated.
Many people are quite anxious, feeling that the bull market is about to end. I don't think the problem is serious, as various indicators are actually quite healthy, whether it's the Nine Gods Index, the Rainbow Chart, etc. So there's no need to be afraid. Bull markets also experience downturns; to be honest, I didn't think much of it yesterday. Today, if I said I wasn't a little anxious, that would be a lie. But then I think, haven't we all gone through this before?
2. The overall market value fell from a peak of $3.7 trillion on December 8 to $3.45 trillion on December 10.
This is also undeniable; emotions (as mentioned later) drive this and are hard to avoid. However, at 9:30 tonight, CPI data will be released, which will have a certain impact on the market. If CPI growth reaches 2.7 as expected, it will not have a negative impact on Bitcoin.
However, Wall Street ETFs are showing positive inflows and the inflow amount is huge. They clearly see this as an opportunity rather than a crisis. For future generations, I think you understand. After all, there are clear expectations of interest rate cuts next week; there is still a chance!
Next, let's discuss the reasons that led to the continuous drop in the cryptocurrency market for three days:
1. The quantum chip Willow developed by Google impacts miners.
I believe 80% of people know this: if this quantum chip technology can complete complex calculations that would take the current fastest supercomputer 10 to the 25th power years in less than five minutes. This time span even exceeds the age of the universe.
If used for mining Bitcoin, it would quickly dominate and impact miners, leading to a market sell-off of Bitcoin to avoid risks. The market's thinking is simple: once quantum chips mature, ordinary miners will lose their competitiveness. Once computing power becomes centralized, the idea of decentralization will face challenges.
Let me share my thoughts:
Quantum computing technology is still in its early stages and faces many limitations, but I believe Bitcoin will respond to similar potential threats through corresponding measures in the future.
Additionally, Google's quantum technology development in cracking Bitcoin private keys has been talked about since 2018. Quantum technology is beneficial for the overall development of humanity. On one hand, quantum attacks will emerge; on the other hand, the POW consensus algorithm only needs to update the quantum algorithm to resist attacks. It's just a story of a spear and a shield; it is essentially no different from current hackers stealing coins. If a market maker uses this to tell a story and write a bullish piece, it might be possible, but in reality, it is hard to happen.
2. Microsoft will not invest in Bitcoin for the time being.
Microsoft's major shareholders opposed the company's Bitcoin investment proposal on December 10 local time. Many people are aware of this reason.
Let me share my thoughts: This event mainly reflects the cautious attitude of most institutional investors towards Bitcoin as a hedging tool in the current market environment, and also shows Microsoft's management's prudent stance on asset allocation and risk control.
However, MARA holds 40,435 BTC, recently increasing its holdings by 11,774, strengthening its long-term layout in Bitcoin. The increase in holdings by MicroStrategy indicates institutional confidence in Bitcoin's long-term bullish outlook. After all, those ETFs on Wall Street have holdings exceeding Satoshi Nakamoto, and more countries will need to make strategic reserves in the future; they are all buying. At this time, if someone says it's unsafe because of quantum technology, do they really think they know less than we do?
3. Market sentiment is overheated, with more pursuit of higher returns and asset safety.
