Quantum Scare or Capital Rotation? Why Bitcoin’s 46 % Slide May Have Little to Do With Quantum Computing
February 22 2026
Bitcoin’s price has slumped from the October 2023 high of roughly $126 k to just above $67 k – a decline of about 46 %. The tumble has rekindled a familiar debate on the crypto‑market floor: is the drop driven by a looming “quantum‑computing” threat to Bitcoin’s cryptography, or is it the latest manifestation of a broader shift in capital allocation and mining economics?
Below we break down the arguments, examine the data, and outline what the current market dynamics mean for investors and developers alike.
1. The Quantum‑Computing Narrative
The notion that a breakthrough in quantum computing could render Bitcoin’s elliptic‑curve signatures obsolete has been circulating in research papers and regulatory filings for years. In late 2025, Jefferies analysts highlighted the risk in a research note, prompting several asset managers—most notably BlackRock—to add a quantum‑risk disclaimer to its iShares Bitcoin ETF prospectus.
However, Bitcoin core developer Matt Corallo dismissed the idea that quantum fears are pricing the market lower. Speaking on the Unchained podcast, Corallo argued that if investors were truly anxious about an imminent quantum attack, the market reaction would be asymmetric: Bitcoin would be singled out while Ethereum, which relies on a different set of cryptographic primitives, would likely hold its ground or even outperform. Instead, both BTC and ETH have fallen in tandem (BTC –46 %; ETH –58 % since early October), suggesting that the weakness is not specific to Bitcoin’s cryptographic design.
“If quantum risk were the driver, you’d expect a divergence between networks, not a parallel slide,” Corallo said.
The consensus among most researchers is that viable, large‑scale quantum computers capable of cracking Secp256k1 (Bitcoin’s signature algorithm) remain at least several years away. Until practical quantum attacks materialise, the market narrative appears more speculative than substantiated.
2. Capital Rotation Toward AI‑Heavy Infrastructure
A more tangible explanation lies in the ongoing reallocation of investment capital toward Artificial Intelligence (AI) and high‑performance computing (HPC) assets. AI workloads demand massive data‑center footprints, specialised ASICs, and significant power—resources that historically have also powered Bitcoin mining operations.
2.1 Funding Shifts
- Venture and institutional investors have increasingly earmarked funds for AI‑centric start‑ups and data‑center projects, often citing higher short‑term returns and more visible commercial use‑cases.
- Several publicly listed mining companies—Riot Platforms, Bitfarms, and others—have announced strategic pivots, redirecting portions of their hash‑rate capacity and energy contracts to AI‑focused services. Activist investor Starboard Value recently urged Riot to accelerate this transition.
2.2 Impact on Mining Economics
The reallocation of capital shows up in mining metrics:
- Difficulty rose to 144.4 trillion, a 15 % jump—the steepest increase since the 2021 post‑China‑ban bounce. The rise follows a 12 % dip that accompanied a fall in hash‑rate after Bitcoin slipped below $70 k in early 2026.
- Hash‑rate recovered from a low of 826 EH/s (mid‑February) back up to roughly 1 ZH/s as the price steadied in the high‑$60 k range.
- Hashprice—the daily revenue per petahash per second—has settled near $23.9, a multi‑year low, squeezing miner margins especially for those without cheap electricity.
Large‑scale operators in low‑cost jurisdictions (e.g., the United Arab Emirates, estimated to hold about $344 million in unrealised mining profit) are still expanding, but the overall sector is feeling the pressure of tighter economics and competing investment opportunities.
3. On‑Chain Indicators: Consolidation in “Extreme Fear”
On‑chain analytics firms provide an additional lens on market sentiment. Glassnode points out that Bitcoin’s price has breached its “True Market Mean”—the aggregated cost basis of actively held supply—currently sitting around $79 k. The Realized Price, a lower structural support level, is near $54.9 k. Bitcoin has been trading in a relatively narrow corridor ($60 k‑$70 k) for several weeks, a classic compression pattern that often precedes a decisive breakout.
The Crypto Fear & Greed Index has been stuck in “extreme fear” territory, reinforcing the perception that market participants are risk‑averse. Yet some analysts argue that this fear may be overstated:
- André Dragosch, head of European research at Bitwise, notes that Bitcoin appears undervalued relative to global money‑supply growth, gold, and exchange‑traded product inflows. He expects a consolidation phase rather than a rapid V‑shaped rebound, warning that sharp capitulations rarely translate into instant recoveries outside of crisis‑driven spikes.
4. Macro‑Economic Backdrop
The next price move may hinge on broader macro variables:
- U.S. Core PCE Inflation: Traders are awaiting the latest figure for clues on Federal Reserve policy direction. Higher-than‑expected inflation could reinforce the case for “scarce assets” like Bitcoin, but a dovish Fed response would likely weaken the dollar and could buoy risk assets.
- Interest‑Rate Outlook: A more hawkish stance would strengthen the greenback, exerting downward pressure on all non‑USD‑denominated risk assets, including crypto.
5. Key Takeaways
| Factor | Implication |
|---|---|
| Quantum‑computing risk | Currently speculative; parallel BTC/ETH weakness suggests it is not the primary driver. |
| Capital rotation to AI | AI data‑center projects are attracting funding that might otherwise support mining, tightening miner economics. |
| Mining difficulty & hashprice | Difficulty up 15 %; hashprice at multi‑year lows – profit margins are constrained, favoring miners with cheap power. |
| On‑chain consolidation | Price stuck between $60 k‑$70 k; “True Market Mean” breached, indicating potential for a breakout (up or down). |
| Macro environment | U.S. inflation & Fed policy remain decisive; higher rates could pressure Bitcoin further, while lower rates could aid a recovery. |
| Valuation perspective | Some analysts see Bitcoin as undervalued relative to traditional stores of value; however, extreme fear may limit upside until sentiment improves. |
6. Outlook
For now, the data points more convincingly toward a capital‑rotation narrative rather than an imminent quantum‑computing apocalypse. Investors should monitor:
- AI‑related capital flows – Continued fundraising for AI infrastructure could keep mining margins under pressure.
- Mining profitability metrics – Any resurgence in hashprice or a decline in difficulty would improve miner sentiment.
- Macro releases – Core PCE and Fed minutes will shape risk appetite across the board.
- On‑chain dynamics – A breach of the Realized Price or a decisive move above the True Market Mean could set the stage for the next trend.
Until a practical quantum attack surfaces, Bitcoin’s price trajectory will likely be dictated by the interplay of capital allocation, mining economics, and broader macro forces. The current “extreme fear” environment offers both risk and opportunity—depending on where capital ultimately decides to flow.
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Source: https://bitcoinmagazine.com/markets/bitcoins-50-slide-quantum-scare
