Recently, Bitcoin prices have dropped significantly for nearly three consecutive days, and many people have deeply felt the strength of this drop, and are somewhat aware 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 considered a milestone. In the past couple of days, it has dropped to over $90,000, leading to the phenomenon of 'liquidation'. Many people lament 'free fall', expressing that they no longer want to pay attention to the market, as the coins they hold have almost entirely devalued.
Many people are quite anxious, feeling that the bull market is coming to an end. I think the issue is not serious; all indicators are actually quite healthy, whether it’s the Nine God Index, the Rainbow Chart, etc. So there's no need to be afraid. Bull markets also have declines; to be honest, I felt nothing yesterday. Today, it would be a lie to say I am not a little anxious, but when I think about it, isn't this how we've all come this far?
2. The overall market capitalization dropped from the peak of $3.7 trillion on December 8 to $3.45 trillion on December 10.
There's not much to say about this; sentiment (mentioned later) drives it, which is hard to avoid. However, the CPI data will be released tonight at 9:30, which has a certain impact on the market. If CPI grows to 2.7 as expected, it will not have a bearish impact on Bitcoin.
However, Wall Street ETFs are showing positive inflows and the inflow volume is enormous, clearly taking the opportunity to buy the dip; they view this as an opportunity rather than a crisis. I think you understand what this means for the future. After all, there is a clear expectation of interest rate cuts next week, and there is still a chance!
Next, let's discuss the reasons that led to the continuous drop in the crypto market for three days:
1. Google's developed quantum chip Willow impacts miners.
I believe 80% of people know this. If this quantum chip technology can complete complex calculations that currently require the fastest supercomputer in the world to take 10 to the power of 25 years within 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 market sell-offs of Bitcoin to avoid risks. The market's thinking is quite simple: once quantum chips mature, ordinary miners will lose their competitiveness. Once computing power becomes centralized, the concept of decentralization faces challenges.
My thoughts:
Quantum computing technology is still in its early stages of development and faces many limitations, but it is believed that Bitcoin will respond to similar potential threats through corresponding measures in the future;
Additionally, Google's quantum technology development of breaking Bitcoin private keys has been mentioned as early as 2018. Quantum technology is beneficial for the development of humanity as a whole. On one hand, quantum attacks will occur; on the other hand, the POW consensus algorithm only needs to update its quantum algorithms to withstand attacks. It's just a story of a spear and a shield, essentially no different from current hackers stealing coins. If a whale uses this to tell a story and write a small essay to promote bullish sentiment, it is possible, but it is very difficult to happen in reality.
2. Microsoft will not invest in Bitcoin for now.
Microsoft's major shareholders opposed the company's Bitcoin investment proposal on December 10 local time. Many people know the reason for this.
My thoughts: This incident mainly reflects the cautious attitude of most institutional investors towards Bitcoin as a hedging tool in the current market environment, and also shows the prudent stance of Microsoft's management regarding asset allocation and risk control.
However, MARA holds 40,435 BTC and has recently increased its holdings by 11,774 coins, intensifying its long-term layout for Bitcoin. The increase in holdings by MicroStrategy indicates institutional confidence in the long-term bullish outlook for Bitcoin. After all, Wall Street's ETF holdings have already surpassed Satoshi Nakamoto, and more countries will make strategic reserves in the future; they are all buying. When someone says it is unsafe because of quantum technology, do they think they are less informed than we think?
3. Market sentiment is overheated, with more pursuit of higher returns and asset security.
