"Quantum panic" cannot stop BTC price from reaching new highs in December

The price of BTC has risen sharply in recent months and is expected to reach a new all-time high in December. However, with the continuous development of the cryptocurrency world, new challenges and problems have emerged. A recent development that has attracted widespread attention in the market is Google's release of its quantum chip 'Willow', which has a computational power of up to 105 qubits. The emergence of such a powerful quantum computing system has sparked panic, especially regarding the security of BTC and other cryptocurrencies. Some even question whether the blockchain of BTC will be compromised by this new technology. However, industry experts believe that these concerns are exaggerated and that there are other key factors that may continue to drive BTC's growth at the end of the year.

"Quantum Panic": Why is BTC currently safe?

After Google released the Willow quantum chip, the entire Cryptocurrency community quickly fell into a panic. The main concern is that quantum computers, with their supercomputing power, may threaten the encryption algorithms that protect the BTC network. Like many Cryptocurrencies, BTC relies on public key encryption, which could theoretically be threatened by quantum computer attacks.

However, the reality is much more complex. Despite the impressive computing power demonstrated by Google's quantum chip, it is still far from being able to break the encryption protection of Bitcoin. Experts like cryptographer Adam Back have pointed out that breaking the encryption of Bitcoin would require millions of quantum bits, a scale that current Quantum Computing machines, including Willow, are far from achieving. As Back emphasizes, the moment when Quantum Computing directly threatens Bitcoin is still far from arriving.

In fact, the general consensus in the entire Crypto Assets community is that the so-called 'quantum panic' is more of a speculative concern than an immediate threat. Current quantum chips are still in the early stages, with limited applications and capabilities. Even Google's Willow chip, with its 105 quantum bits, is far from sufficient to crack the encryption defense of the BTC blockchain. As CryptoQuant CEO Ju Ki Young pointed out on social media, quantum computers are unlikely to crack BTC in this decade or even the next decade.

In addition, the encryption field is not standing still. Developers and cryptographers have been exploring post-quantum encryption technology, aiming to create encryption algorithms that can withstand quantum computer attacks. In the future, Bitcoin and other Crypto Assets can ensure network security by transitioning to quantum-resistant algorithms.

Therefore, although quantum computing represents an exciting new field, it does not pose a direct threat to the security of BTC. The panic caused by the release of Google's quantum chip should be treated with caution.

BTC price rises: The influence of the Federal Reserve

As 2024 draws to a close, the price of BTC continues to rise, and many are speculating on what factors will drive this growth in December. One event that could have a significant impact on the price of BTC is the Federal Reserve's interest rate meeting scheduled for December 17-18. This is expected to be the last meeting of 2024 and could have important implications for BTC and other assets.

Currently, the market generally expects the Fed to cut interest rates by 0.25% at this meeting. Rate cuts may have various effects on the financial markets, including increasing demand for risk assets such as BTC. Lower interest rates usually mean lower borrowing costs and increased liquidity in the economy, which may lead to higher asset prices. In addition, considering that the actual yield of government bonds is still low, BTC continues to be an attractive store of value for investors seeking alternatives to traditional assets.

However, the outlook for 2025 remains uncertain. Although the rate cut in December is expected to provide short-term support for BTC's price, the actions taken by the Fed next year will depend on a variety of factors, including inflation, economic growth, and geopolitical situation. If the Fed adopts a more cautious policy in 2025, the price of BTC may face greater volatility.

Still, BTC's role as a hedge against inflation and a store of value continues to appeal to investors, especially in times of economic uncertainty. If the Fed's policy continues to support risky assets such as BTC, we could see further gains in BTC prices in the coming months.

BTCETF Fund Inflows: Institutional Confidence Continues to Grow

This year, one of the most important developments in the Cryptocurrency market is the growing interest of institutions in BTC. The continuous inflow of funds into BTC exchange-traded funds (ETFs) clearly demonstrates the increasing confidence of institutional investors in the long-term value of BTC. The influx of these institutional funds has helped support the price of BTC, even during market turbulence.

The attractiveness of BTCETF is multifaceted. First, it provides institutional investors with a regulated and convenient way to gain exposure to BTC without directly holding or storing Cryptocurrency. ETFs also provide liquidity and can be traded on traditional stock exchanges, making them an attractive option for investors seeking diversified investment portfolios.

At the same time, the increase in institutional investors has also led to the maturity of the BTC market. With more large investors entering the market, the price of BTC is usually less volatile than in the early stages of market development. This trend also helps establish the legitimate status of BTC as a traditional financial asset class.

Despite the rising price of BTC, some analysts have expressed concerns about the current market valuation. On-chain data, especially the MVRV (Market Value to Realized Value) indicator, suggests that BTC may have entered a relatively high valuation range. This means that if investor sentiment changes due to macroeconomic shifts or broader market trends, BTC may face the risk of short-term price correction.

Risks and opportunities for BTC in December

Looking ahead to December, BTC investors face both risks and opportunities. While the "quantum panic" may seem largely unfounded, the broader market still faces potential volatility, especially from the impact of macroeconomic events, such as the Fed's interest rate decisions. If the Fed cuts rates as expected, this could provide a short-term boost to BTC prices, but investors should remain vigilant considering possible corrections due to high valuations.

The growing institutional interest through BTCETF has brought positive signals to the market, indicating the growing legitimacy and confidence of BTC. However, the MVRV indicator reminds us that the price of BTC may retrace in the event of an overheated market.

In short, although quantum computing is still a promising field that may have long-term implications, it will not pose a threat to the security of BTC in the short term. On the contrary, factors such as Federal Reserve policies, institutional fund inflows, and the balance of BTC on cryptocurrency exchanges may become the main drivers of BTC price fluctuations in December. Investors should continue to follow these developments and be prepared to deal with the risks and opportunities that may arise at the end of the year.

This article "Quantum Panic" cannot stop BTC prices from reaching new highs in December, originally appeared in ChainNews ABMedia.