Kevin O’Leary Bitcoin Crash Potential Warning
Kevin O’Leary, a prominent investor on Shark Tank, has been vocal about the potential of future drops in Bitcoin, especially as a stream of institutional investors begins to slow due to the recent drops in Bitcoin prices.
O’Leary said that TradFi institutions have started to alter their strategy for exposure to Bitcoin, leading to a 50% drop since October which has proven to change the strategies of institutions. He explained that Bitcoin and Ethereum are the only ones who matter calling the altcoins to recover after the crash as “poo poo coins.”
O’Leary said that institutions have realized that 90% of the upside and, more importantly, the volatility in the crypto markets is contained within Bitcoin and Ethereum. Consequently, they have been focusing on the two largest coins, and they have been trimming exposure to the rest of the crypto markets.
This shift in the strategy of institutions is evidenced by the recent activities of Harvard where it decreased its BlackRock Bitcoin ETF (IBIT) holdings by 21% as a result of the downturn in the market. The retreat of institutional capital comes amid macroeconomic and geopolitical challenges, including the talks of Iran´s nuclear program. There is still a lot of pressure from sellers.
Adding to the concerns, O’Leary mentioned risks of quantum computing. He explained that the fast-developing field of quantum computing is becoming a threat to the confidence of institutions in the security of Bitcoin’s blockchain, thus not allowing them to increase their Bitcoin allocations.
“The idea that a quantum computer could eventually break the chain is making institutions hesitate,” he explained. O’Leary believes that, in the absence of mitigating such risks, a relatively safe and disciplined approach will have TradFi firms restricting their exposure to crypto to no more than 3%.
Most researchers have assumed the risks of quantum computing will develop over a 10 to 15 year time span, yet the crypto industry is responding to this phenomenon. In a collaboration with BlockSec, Bitget has announced the UEX Security Standard that aims to reinforce security of exchanges.
Additionally, the merged proposal, BIP 360, that has made its way to the official Bitcoin Improvement Proposals, seeks to incorporate quantum-resistant features into Bitcoin by introducing Pay-to-Merkle-Root (P2MR) functionality into its scripts. Also, with respect to Saylor’s Strategy initiative, collaboration is ongoing to reinforce Bitcoin against the risks of quantum computing.
Bitcoin has declined over 1.50% in the last 24 hours, now trading around $67,967. The cryptocurrency has shown a high of $70,067, a low of $67,301. Analysts draw attention to the lack of institutional support. If concerns regarding quantum computing or macroeconomic pressures continue to dominate, Bitcoin will face mounting stress.
O’Leary’s concerns highlight an ever present reality: institutions have altered their focus to risk control and are directing attention to the most resilient assets. For the moment, altcoins are battling to collapse Bitcoin and Ethereum, the most dominant cryptos.
