Bitcoin faces quantum risk: why SegWit wallets may offer limited protection

  • SegWit wallets delay public key exposure until the point of transaction.
  • Holding Bitcoin in SegWit addresses offers temporary protection if left untouched.
  • Critics believe practical quantum computing remains decades away.

Quantum computing’s long-theorised threat to Bitcoin is resurfacing in the crypto conversation.

The idea that a powerful enough quantum machine could break cryptographic security and expose Bitcoin keys has moved from theoretical chatter to practical concern.

Bitcoin analyst Willy Woo recently suggested a short-term safeguard: store Bitcoin in SegWit addresses for the next seven years.

While the tactic has sparked debate, the broader community remains divided over whether quantum computers are a real, imminent threat or just the latest tech-driven scare.

SegWit offers delayed public key exposure

Segregated Witness (SegWit), introduced on 23 August 2017, is a protocol upgrade that changes how data is stored in Bitcoin transactions. Woo suggests that SegWit’s delayed public key exposure could act as a deterrent against quantum attacks.

Unlike Taproot, which exposes the public key immediately within the address, SegWit only reveals it during transaction execution.

This delay makes it harder for a quantum computer to reverse-engineer the private key from the public one before the transaction is completed.

Under current conditions, exposing a public key does not present much of a problem. However, if and when quantum computing advances to the point of real-time decryption capabilities, the exposure window of Taproot wallets could be a key vulnerability.

In contrast, SegWit’s hashing conceals the public key behind a layer of encryption until absolutely necessary. This may keep Bitcoin more secure during this anticipated transition period.

Hodling in SegWit comes with major constraints

While the SegWit method may offer protection, it carries a critical limitation. According to Woo, users must not move their Bitcoin from the SegWit address.

Any outgoing transaction would expose the public key, potentially inviting a quantum attack if executed during the transaction.

As such, this method is not viable for active traders or anyone needing liquidity in the short term. It is a static defence mechanism, not a dynamic solution.

This approach effectively puts Bitcoin in a vault. It is safe but inaccessible. It is also only as secure as the continued absence of real-time quantum decryption.

If a breakthrough comes earlier than anticipated, even SegWit-held coins could be compromised during withdrawal. Woo acknowledges that this is only an intermediary measure.

It is meant to bridge the gap until a quantum-resistant Bitcoin protocol becomes available.

Experts disagree over SegWit’s efficacy

Not everyone agrees that SegWit provides any meaningful protection. Charles Edwards, founder of digital asset fund Capriole, has dismissed the idea as ineffective.

He argues that SegWit is not a quantum-safe model and relying on it could delay necessary network upgrades.

According to Edwards, the belief that Bitcoin has a seven-year buffer period could create complacency, weakening pressure to accelerate work on quantum-resistant algorithms.

This disagreement underscores a broader lack of consensus in the crypto space on how seriously the community should take quantum risk.

Although protocol upgrades are under development, there is concern among developers that current initiatives are progressing too slowly.

Some argue that existing security layers were not built with quantum capabilities in mind, making them structurally vulnerable regardless of transaction format.

Sceptics say quantum fears are overblown

Despite the alarm, some in the community believe the risk is being overstated. Critics point to quantum computing’s persistent technical limitations.

In a post in February, Bitcoin advocate Adrian Morris claimed quantum tech is “barely viable”, citing issues with thermodynamics, memory, and persistent calculations.

Others argue that traditional financial systems and major banks would be far more attractive targets for early quantum attacks than a decentralised network like Bitcoin.

Woo notes that Bitcoin held by custodians, such as ETFs or treasury firms, may be better shielded in the interim. This is only true if those institutions take proactive steps to secure their holdings.

Until a comprehensive upgrade is implemented, the quantum debate will continue to shape discourse around Bitcoin’s long-term security.

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Bitcoin holds $106K as shutdown optimism fuels broad market rally

  • Bitcoin bounced back to trade near $106,000 on shutdown resolution hopes.
  • The end of the shutdown could release a $150-200B liquidity jolt into markets.
  • However, the shutdown is stalling crucial US crypto regulation bills.

Cryptocurrency markets started the week on a strong footing, with Bitcoin holding above the key $105,000 level as growing optimism around a potential resolution to the US government shutdown helped steady broader risk sentiment.

Following a volatile period, a weekend rally extended into Monday, with Bitcoin recovering from an early dip to trade near $106,000.

However, analysts warn that while an end to the shutdown could provide a short-term liquidity boost, the prolonged political impasse has created a significant, under-the-radar threat to the crypto industry’s long-term regulatory future.

The upbeat mood was felt across the asset spectrum.

In the crypto space, Ether traded just under $3,600, while XRP led gains among major altcoins, jumping 9% on anticipation of a potential spot ETF.

Crypto-related stocks, which suffered heavy losses last week, also rebounded strongly, with Coinbase (COIN) rising 4.1% and Robinhood (HOOD) gaining 4.8%.

The rally mirrored gains in traditional markets, where the S&P 500 climbed 1.6% and the Nasdaq rose 2.2%.

This recovery was largely fueled by growing confidence that the record-breaking 39-day government shutdown may be nearing an end, a sentiment bolstered by prediction market data and a weekend social media post from President Donald Trump.

The shutdown’s double-edged sword for crypto

While the market is cheering a potential resolution, the shutdown has created a complex “Jekyll and Hyde” scenario for the digital asset industry, according to David Nage, head of research at Arca.

In a Monday note, Nage explained the positive side: an end to the shutdown could release a massive liquidity injection of 150–200 billion from the Treasury General Account into bank reserves. Historically, such a jolt has been a major tailwind for risk assets like crypto.

However, there is a significant downside.

“The larger story for digital asset adoption over the next three to five years is being shaped behind the scenes… and the Banking Committee staff rooms are currently dark due to the shutdown,” Nage explained.

A race against time for US crypto regulation

The ongoing shutdown has completely stalled progress on crucial crypto legislation, including the CLARITY Act and the Senate’s digital asset market structure bill.

Nage warned that this delay poses a greater long-term threat to the industry than recent market volatility.

With the 2026 midterm elections approaching, the window for passing comprehensive digital asset regulation is closing.

“If comprehensive digital asset legislation is delayed until 2026 and then dies in midterm politics, the industry will miss out on the regulatory clarity needed to attract institutional capital and achieve sustainable growth,” Nage said.

He concluded that the timing is critical. “If the shutdown ends in November, we may benefit from both a liquidity injection and a legislative opportunity,” he said.

If it drags into December, the legislation may miss its window.

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Starknet (STRK) price soars 30%, but why is the altcoin rising?

  • Starknet (STRK) price technical breakout signals bullish momentum with new resistance near $0.214.
  • Bitcoin staking and BTCFi incentives drive STRK adoption and network growth.
  • S-Two prover deployment has also boosted throughput, privacy, and decentralisation on Starknet.

Starknet (STRK) price has surged dramatically in recent days, catching the attention of traders and crypto enthusiasts alike.

The altcoin has gained more than 30% in just 24 hours, fueled by a combination of technological upgrades, strategic integration with Bitcoin, and renewed market optimism.

This sudden upswing has sparked questions about what is driving STRK’s momentum and whether the altcoin can sustain its gains in the near term.

Bitcoin staking boosts STRK utility

One of the primary drivers behind the rally is Starknet’s BTCFi initiative, which allows Bitcoin (BTC) holders to stake their BTC and earn STRK rewards while maintaining custody.

The program has already attracted significant capital, with over $200 million staked on the network, including 880 million STRK and 835 BTC, according to the latest reports.

By tapping into Bitcoin’s massive $2.1 trillion market capitalisation, Starknet positions STRK as a key rewards token and a practical asset for paying network fees.

The BTCFi ecosystem expansion not only strengthens Starknet’s liquidity but also enhances its cross-chain utility.

Investors are closely monitoring total value locked (TVL) in Bitcoin staking, which currently sits at around $1.5 billion, to gauge continued adoption and the altcoin’s potential growth.

The influx of BTC and STRK into the network has bolstered confidence in the protocol’s future, creating a clear catalyst for the recent price surge.

S-Two Prover accelerates adoption and decentralisation

Another major factor propelling STRK is the deployment of StarkWare’s next-generation S-two Prover.

Released on the mainnet a few days ago, this open-source zero-knowledge proof system is designed to increase throughput, reduce verification costs, and strengthen decentralisation.

By producing validity proofs for every block up to ten times faster than its predecessor, the S-two prover allows real-time verification of off-chain transactions and supports new types of applications, from private DeFi protocols to zk-secured games and verifiable AI.

S-two is designed to operate efficiently even on consumer hardware, meaning that anyone can participate in the network without relying on centralised data centres.

This advancement not only improves network security and censorship resistance but also significantly enhances user experience.

The combination of speed, privacy, and accessibility makes Starknet a more compelling platform for developers and investors alike, contributing directly to bullish sentiment surrounding STRK.

Market analysts also note that the recent surge is supported by optimism surrounding Starknet’s v0.14.0 upgrade.

The update introduces distributed sequencers, 6-second blocks, and EIP-1559-style fee burns, all of which improve decentralisation and network efficiency.

While early migration caused temporary outages, the upgrade underscores Starknet’s commitment to building a secure, scalable Layer 2 ecosystem that can interact with both Ethereum and Bitcoin.

Technical breakout fuels the STRK price rally

From a technical perspective, STRK has confirmed a major bullish breakout.

The altcoin surpassed the 38.2% Fibonacci retracement level at $0.1343 and remains above the 30-day simple moving average of $0.1216.

Starknet price chart
Starknet price chart | Source: CoinMarketCap

Momentum indicators such as the RSI and MACD show strong upward trends, signalling that the altcoin has invalidated much of its previous yearly downtrend.

With resistance set near $0.214, traders should closely watch whether the current momentum can push STRK to new highs.

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Bitcoin’s new problem: it’s not leverage, it’s long-term holders cashing out

  • Long-term holders have sold approximately 400,000 Bitcoin ($45B) in the past month.
  • This sell-off is driven by spot markets and fading conviction, not high leverage.
  • Bitcoin fell below the key $100,000 level for the first time since June.

Bitcoin has once again slipped below the critical $100,000 mark, but the force driving this latest downturn is different and potentially more concerning for the market.

Unlike the leverage-fueled crash in October, this sell-off is being driven by a quieter, more sustained exodus: long-term holders are cashing out, creating a $45 billion supply glut that is testing the market’s conviction.

The original cryptocurrency fell as much as 7.4% on Tuesday, marking a more than 20% decline from its record high a month ago.

While it has since staged a modest recovery, the nature of the selling pressure suggests a fundamental shift in market dynamics.

From forced liquidations to fading conviction

The key difference in this downturn is the source of the selling.

While October’s crash was defined by a cascade of forced liquidations from overleveraged traders, the current slide is being led by a steady drumbeat of selling in the spot market.

According to Markus Thielen, head of 10x Research, long-time Bitcoin holders have offloaded approximately 400,000 Bitcoin over the past month—an exodus valued at around $45 billion.

This sustained selling from seasoned investors is creating a market imbalance that new buyers are struggling to absorb.

This analysis is supported by on-chain data.

“Over 319,000 Bitcoin has been reactivated in the past month, mainly from coins held for six to twelve months — suggesting significant profit-taking since mid-July,” Vetle Lunde, head of research at K33, told Bloomberg.

The whale problem: big buyers are disappearing

With market leverage now relatively muted, attention has turned to the large, long-time holders who are choosing to sell.

Thielen told Bloomberg that “mega whales”—entities holding between 1,000 and 10,000 Bitcoin—began offloading large volumes earlier this year.

For a time, institutional players were able to absorb this supply, leading to choppy, sideways price action.

However, since the October crash, broader demand has faded, and the accumulation by smaller whales (holding 100 to 1,000 Bitcoin) has dropped sharply.

The result is a growing imbalance between sellers and buyers. “The whales are just not buying,” Thielen said.

What comes next? A path to further declines

This sustained selling from long-term holders could have lasting implications.

Thielen warns that the current unwind could continue well into next spring, drawing parallels to the 2021–2022 bear market, where large holders sold over one million Bitcoin over the course of nearly a year.

“If this is a similar pace,” he said, “we could see this situation going on for another six months.”

While not predicting a catastrophic crash, Thielen sees room for further declines as the market consolidates.

“I am not a believer in the cycle,” Thielen said, “but I would assume that we sort of consolidate and potentially drift even a bit lower from here. $85,000 is my maximum downside target.”

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Bitcoin tests $100K support after massive liquidation event rocks market

  • Bitcoin briefly fell to $100,000 after a sharp market-wide sell-off.
  • Over $1.6 billion in leveraged long positions were liquidated in 24 hours.
  • The crash was fueled by “risk-off” sentiment and Fed rate cut uncertainty.

The cryptocurrency market was rocked by a wave of forced selling late Monday, triggering a sharp downturn that saw Bitcoin briefly touch the $100,000 level and erased more than $1.6 billion in leveraged bullish positions.

The sudden deleveraging event, one of the largest since September, sent a shockwave across the digital asset space, with major altcoins like Ether, Solana, and XRP posting heavy losses as renewed macroeconomic fears spooked investors.

The core of the market’s turmoil was a massive cascade of liquidations. In the last 24 hours, more than $2 billion in crypto futures contracts were forcibly closed, with long traders—those betting on higher prices—accounting for nearly 80% of the losses at $1.6 billion, according to CoinGlass data.

This automatic selling pressure occurs when traders using borrowed funds see their positions move sharply against them, forcing exchanges to sell the assets to cover losses. 

Macro headwinds and risk-off sentiment

The sell-off was fueled by a broader “risk-off” mood spreading across financial markets.

Analysts pointed to a combination of factors that are making investors nervous and prompting them to shed speculative assets.

“Recent speculation that the FOMC may pass on another rate cut this year, as well as concerns over tariffs, credit market conditions, and equity valuations, helped drive markets lower,” Gerry O’Shea, head of global market insights at Hashdex, said in an email to CoinDesk.

He added that Bitcoin’s price has also been affected by profit-taking from long-term holders, which he described as “an expected phenomenon as the asset matures.”

Bitcoin at a crossroads: a test of support

Following the plunge, Bitcoin staged a modest rebound to trade around $101,000. However, the token remains down 5.5% over the past day and more than 10% for the week.

The pain was more severe for altcoins, with Ether dropping 10%, while Solana and BNB lost 8% and 7% respectively.

Despite the sharp downturn, some analysts believe the long-term picture for Bitcoin remains positive.

“While $100,000 may be a psychologically important support level, we do not view today’s price action as a sign of a weakening long-term investment case for Bitcoin,” O’Shea said.

With the Federal Reserve’s next move uncertain and global risk appetite fragile, the coming days will be a crucial test for the market, determining whether Bitcoin can hold its current level or if another wave of forced selling is on the horizon.

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