Crypto Long & Short: Why bitcoin's quantum fears will pass just like the climate panic

In this week’s Crypto Long & Short Newsletter, Martin Gaspar on how bitcoin looks to overcome quantum fears, echoing past climate backlash.

Make us preferred on Google

What to know:

You're reading Crypto Long & Short, our weekly newsletter featuring insights, news and analysis for the professional investor. Sign up here to get it in your inbox every Wednesday.

Welcome to our institutional newsletter, Crypto Long & Short. This week:

• Martin Gaspar on how bitcoin looks to overcome quantum fears, echoing past climate backlash
• Top headlines institutions should pay attention to by Francisco Rodrigues
• Aave’s revenue multiples hit 2024 lows despite higher prices in Chart of the Week

Thanks for joining us!

-Alexandra Levis

Expert Insights

Why bitcoin's quantum fears will pass just like the climate panic

By Martin Gaspar, senior crypto market strategist, FalconX

Quantum has become a major theme for crypto the past few months, in part because of technological developments in that space, but also as investors look for potential culprits of the stagnation in crypto prices post October. Quantum risk may come across as an existential threat to bitcoin BTC$73,225.38 given the potential for bad actors to crack legacy accounts such as Satoshi’s. However, a clearer understanding of the threat and increasing industry focus on solutions are driving toward a positive resolution.

There are striking parallels to the concerns over the energy use and climate impact of Bitcoin’s Proof of Work (PoW) mining that dominated headlines in 2021. Those felt existential too, as the headline risk made BTC socially unacceptable. Although industry insiders knew climate concerns were misguided (compared to other industries, such as tech’s data centers, BTC’s energy footprint is low), fears perpetuated, culminating with Tesla dropping BTC as a payment option because of climate risk. At the time, Elon Musk’s support for BTC was a large driver of sentiment, so this action startled the market. If forward-thinking Elon thought the issue was meaningful enough to pull his support of BTC, more conservative groups could seek to ban it or otherwise stifle BTC adoption. From an investor standpoint, why would you buy into an asset with such risk? This question resonates today and is especially pertinent as lower crypto prices weigh on sentiment.

The good news is that the industry can overcome this. In 2021, it took industry leader Strategy taking initiative to work with BTC miners to publish stats on the renewable mix of their energy consumption. While it was no secret to the crypto community that BTC miners naturally seek the lowest cost of energy, which is often renewables, compiling hard data helped convince naysayers. The industry was able to regain credibility to help dispel concerns.

We are seeing the same play out as industry stalwarts come together to publish facts around quantum risk. Coinbase recently established a quantum computing and blockchain working group, which will help issue recommendations for industry participants to protect against quantum risks and provide analysis on quantum breakthroughs. Furthermore, on February 5, as BTC was sharply selling off towards $60,000, Strategy announced a quantum security program during its earnings call, which may have helped stem further selling. It aims to coordinate with the “global cyber, crypto, and bitcoin security community” to help with Bitcoin’s quantum transition.

Concurrently, several startups are working on developing post-quantum technology for blockchains, such as Project Eleven and BTQ Technologies. These developments indicate that the crypto community is rapidly working towards solutions and should help alleviate near-term concerns.

BTC stands to turn the page through its proactive efforts to dispel quantum hysteria. Once the industry issues clear facts and a plausible plan, this issue will come to pass, just like the PoW climate overhang from years past.

Headlines of the Week

Francisco Rodrigues

Geopolitical risks have shown again this week that liquidity in the cryptocurrency space means investors head for the exits as soon as they’re able to. The renewed Middle East conflict has led to major outflows from Iran, while in the U.S. investors have also been backing down. Still, builders appear to be unphased.

• Over $9 billion flees bitcoin and ether ETFs in four months: U.S.-listed spot bitcoin and ether exchange-traded funds have seen record outflows over the last four months, with investors moving $6.39 billion off of BTC funds and $2.76 billion off of ether funds.
• Iranian crypto outflows jump 700% minutes after U.S.-Israeli airstrikes: Blockchain analytics firm Elliptic said crypto outflows from Iran’s largest cryptocurrency exchange Nobitex exploded within minutes of the first U.S.-Israeli airstrikes on the country.
• Ethereum Foundation drops most ambitious roadmap in years, targets finality in seconds by 2029: The Foundation’s long-term roadmap outlines seven hard forks, prioritizing performance, post-quantum cryptography, and privacy features.
• Morgan Stanley Applies for Bank Charter to Custody Crypto Assets: The firm applied to the Office of the Comptroller of the Currency (OCC) for a national trust bank charter to offer crypto trading, custody, and staking services to U.S. clients.
• Indiana prepares to put bitcoin in its public retirement plans: The move sees Indiana join at least 21 states investing in or evaluating cryptocurrencies for public funds.

Chart of the Week

Aave’s revenue multiples hit 2024 lows despite higher prices

Aave is currently experiencing a fundamental valuation reset: while the token price remains higher than its 2024 lows, the FDV/annual revenue ratio has collapsed back to those levels (<20x), indicating the protocol is generating significantly more revenue relative to its market cap than it did during the speculative peaks of 2025. This decoupling suggests the market is heavily discounting Aave’s current earnings power, likely pricing in the execution risk following the narrow March 1 passage of the "Aave Will Win" proposal and the high-profile exit of core developer BGD Labs.

Listen. Read. Watch. Engage.

• Listen: Dave LaValle, President of CoinDesk Data & Indices joins FinTech.TV to chat about the recent markets.
• Read: Stablecoin Market Dominance Surges As Digital Assets Trend Lower by CoinDesk Research.
• Watch: CoinDesk TV's quick roundup of the top news of the day that you may have missed in the digital asset space.
• Engage: Consensus Miami is heating up. View the speakers and register today before prices increase!

Looking for more? Receive the latest crypto news from coindesk.com and explore our robust Data & Indices offerings by visiting coindesk.com/institutions.

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc., CoinDesk Indices or its owners and affiliates.

More For You

CoinDesk Research looks into how Pudgy Penguins disrupts traditional toys market via a phygital model. With 2M+ units sold, they scale via global partnerships and events.

What to know:

• Disrupting a Stagnant Market: Pudgy Penguins is utilizing a "Negative CAC" model to challenge the traditional $31.7B licensed toy industry by treating physical merchandise as a profitable user acquisition tool rather than just a final product.

Meer voor jou

CoinDesk 20 performance update: Solana (SOL) gains 5.6%, leading index higher

Aave (AAVE) joined Solana (SOL) as a top performer, rising 5% from Tuesday.

The Protocol: New Ethereum scaling plans

2 minutes ago

Bitcoin just cleared $73,000, but skeptical traders are already bracing for a bull trap

3 minutes ago

Billions in crypto are moving in Iran. Analysts can't agree if it's war-time panic or business as usual.

44 minutes ago

Coinbase, Strategy lead crypto stocks higher as bitcoin spikes above $72,000

1 hour ago

Bitcoin 'air pocket' above $72,000 could mean quick run to $80,000

2 hours ago

CoinDesk 20 performance update: Solana (SOL) gains 5.6%, leading index higher

2 hours ago

Stablecoin giant Tether invests $50 million in sleep technology startup Eight Sleep

3 hours ago

Morgan Stanley taps Coinbase and BNY for custody in proposed Bitcoin ETF

5 hours ago

Kraken becomes first crypto company to secure Fed master account access

5 hours ago

Bitcoin hits one-month high near $72,000 as haven demand rises

5 hours ago

Ray Dalio says 'there is only one gold' as bitcoin outperforms gold during worst geopolitical crisis in years

9 hours ago

Trump’s crypto adviser rejects Jamie Dimon on treating yield-bearing stablecoins like banks

3 hours ago

In this article

BTCBTC$73,225.38◢7.41%