Key Points
- Bitcoin’s price drop leads to $1.8 billion in crypto liquidations, setting the stage for a potential rally.
- Google’s new quantum innovation, Willow, sparks concern about Bitcoin’s security.
The cryptocurrency market experienced a surge in volatility over the past day, with Bitcoin’s price falling to roughly $94,725. As a result, the total value of the crypto market decreased by over 6% to approximately $3.6 trillion on December 10.
This price dip led to the largest crypto liquidation in recent history, totaling around $1.8 billion. The majority of these liquidations, over $1.5 billion, were from long traders. The most substantial single liquidation order was on the Binance exchange, involving an ETH/USDT trade worth nearly $20 million.
Causes for the Liquidations
The crypto market experienced a wave of panic selling following a series of negative news. Google’s announcement of its latest quantum innovation, Willow, caused particular concern. This new chip can reportedly complete tasks in under five minutes that would take today’s fastest supercomputer 10 septillion years.
This news triggered speculation about the potential impact on Bitcoin’s SHA-256 security. However, Charles Edwards, founder of Capriole Investment, suggested that the threat of quantum computing to Bitcoin is still about 5-10 years away. Edwards stressed the importance of Bitcoin’s core developers implementing network updates to protect against a quantum attack.
Meanwhile, the governments of El Salvador and Bhutan hinted at slowing down their Bitcoin plans. Conversely, the United States is moving towards passing strategic Bitcoin reserve legislation, which could influence other countries, including Russia.
What Lies Ahead?
The recent spike in crypto liquidations could lead to a bullish sentiment in the market. The IS spot Bitcoin ETFs saw a net cash inflow of about $479 million, led by BlackRock’s IBIT and Fidelity’s FBTC. Additionally, spot Ether ETFs recorded a net cash inflow of over $149 million, resulting in a total net inflow of approximately $1.56 billion.
With Bitcoin’s supply on centralized exchanges at a multi-year low of about 2.25 million, a new bullish cycle could be on the horizon.
