Cryptocurrency markets sink amid panic over Google’s quantum chip Willow

The cryptocurrency market faced an unexpected downturn on Monday and Tuesday, shedding nearly $260 billion in market capitalization, following Google’s announcement of its next-generation quantum chip, according to data from the cryptocurrency analytics platform Coinglass.

During this period, 24-hour trading volumes surged dramatically, climbing from $150 billion to $350 billion, reflecting an increase in liquidation of long positions as panic selling intensified. According to Coinglass, the market witnessed one of its largest liquidation events in recent history.

Notably, the highest liquidations were observed in altcoins such as ethereum, solana and dogecoin rather than bitcoin. The largest single liquidation recorded on Binance involved $19.6 million worth of ethereum, with total liquidations exceeding $250 million.

In the past 24 hours, bitcoin’s value plummeted by over 6%, reaching $94,725, triggering significant volatility in the broader market, investing.com reports. Altcoins bore the brunt of the downturn, with the total market value of cryptocurrencies excluding bitcoin plunging by over 15%, amounting to a $258 billion loss. The overall crypto market capitalization fell by more than 7% to $3.58 trillion.

Chip that handles calculations taking 10 septillion years

Speculation abounds regarding the causes behind this wave of panic selling, with much of the concern attributed to Google’s announcement of its next-generation quantum chip, Willow. The chip reportedly performs calculations in under five minutes that would take the fastest supercomputers 10 septillion years to complete.

Experts suggest this technological leap has raised fears over bitcoin’s vulnerability to quantum computing attacks. However, they assert that bitcoin could adapt by enhancing its security measures to mitigate these risks.

Withdrawals in bitcoin investments

Adding to the turmoil, the Chinese government transferred 406 bitcoin to digital asset trading firm QCP Capital on Monday, equating to a $40 million sale.

Bhutan, a prominent bitcoin investor with over 11,000 coins, remains in focus, while reports indicate El Salvador may reconsider its bitcoin adoption policies as part of negotiations for a $1.3 billion loan agreement with the International Monetary Fund (IMF).

Cooling in leveraged and futures markets

The leveraged crypto sector also experienced intensified selling pressure, with over 582,000 traders liquidated and total liquidations reaching $1.7 billion, with more than $1.5 billion stemming from long positions, underscoring the challenges faced by traders attempting to counter the downtrend.

Despite the market turbulence, institutional demand for Bitcoin persists. The total bitcoin supply on centralized exchanges has declined by over 10,000 to 2.25 million. BlackRock (BLK) remains a leading accumulator among U.S. spot bitcoin exchange-traded fund (ETF), signaling potential optimism for a market recovery.