The Relevance of Shore's Algorithm to Bitcoin's Decline: What the Market Is Really Afraid of

The argument has resurfaced that concerns about quantum computing technology, exemplified by Shore’s algorithm, are behind the stagnation in the Bitcoin market. While some prominent investors argue that this quantum risk has already influenced market behavior, on-chain analysts and the developer community have expressed a different view.

Let’s decipher the real market factors from the comparison of Bitcoin’s price trends and the performance of other asset classes.

The Current State of the Bitcoin Bear Market: The Scale of the Price Decline as Seen in the Latest Data

Bitcoin’s recent price action shows a stark contrast to other asset classes.The current BTC price is $84.14K, with a 24h change of -5.55% While recording, it has fallen significantly from the previous month’s high of $126.08K.

This creates an interesting situation. Since Trump’s election in November 2024, Bitcoin has recorded a 2.6% decline, while gold has risen by 83%, silver by 205%, Nasdaq by 24%, and S&P 500 by 17.6%. This relative performance divergence has sparked the quantum risk debate.

The Reality of Shore’s Algorithm Implementation: Validating the Quantum Threat Theory

Shore’s algorithm is considered the most dangerous tool in quantum computing. This algorithm is theoretically capable of breaking the elliptic curve cryptography, which is the security foundation of Bitcoin. Nick Carter, a partner at Castle Island Ventures, said the quantum risk is “the most important topic of the year” and claims that Bitcoin’s “mysterious” bear market is due to quantum technologies such as Shore’s algorithm.

However, the tech community has a different view. Bitcoin developers, including Blockstream co-founder Adam Back, have pointed out that it will take decades for practical quantum attacks using Shore’s algorithms to be realized. Therefore, the prevailing view is that citing quantum risk as a factor in short-term price fluctuations is at odds with technical reality.

The Truth Market Structure Tells: Analyzing Whale Selling and Supply Pressure

@Checkmatey, an analyst at the on-chain analytics platform Checkonchain, counters that blaming quantum risk for Bitcoin’s price stagnation is the equivalent of “blaming market manipulation.” In his view, the market is driven by supply-demand and positioning dynamics, rather than sci-fi risk scenarios.

Vijay Boyapati, a well-known investor and Bitcoin holder, provided a more specific explanation: “The real factor is none other than the massive supply released into the market when it reached the $100,000 level, which is considered the magic number of many.” The concentration of profit-taking by whales (large holders) at this level, resulting in increased supply pressure. It is an explanation that is close to the actual situation.

What the Comparison with Gold and Silver Implicates: Inflation Hedging and Shifting Asset Allocation

The performance of gold and silver over the same period highlights the reality of market sentiment. Gold rose 1.7% to a record high of $4,930 per ounce, while silver rose 3.7% to $96.

According to @Checkmatey, this phenomenon is explainable: “There is a strong demand for gold because the state buys gold instead of government bonds. This trend has been going on since 2008 and has accelerated since February 2022.” In other words, there is a shift in asset allocation due to changes in the macroeconomic environment, and it is a phenomenon that has nothing to do with quantum technology risks.

In fact, Jefferies strategist Christopher Wood has positioned quantum computing as a long-term risk factor, so much so that he has shifted from his portfolio to gold by removing Bitcoin from his portfolio. This suggests a change in long-term asset allocation strategy rather than a short-term price decision.

Preparing for Quantum Resistance: BIP-360 and Bitcoin Developers’ Strategies

Even if the quantum threat is really serious, the Bitcoin technology community is already preparing to respond. Bitcoin Improvement Proposal 360 (BIP-360) proposes the introduction of a quantum-resistant address format and has already hinted at a gradual transition path as needed.

In other words, the timeline for threats caused by quantum technology such as Shore’s algorithm to become a reality is sufficiently leeway, regardless of the speed of Bitcoin’s technological evolution. Since the timeline of technical response is measured in years rather than market cycles, it does not function at all as a factor in price fluctuations for months or years.

Market Sentiment and Long-Term Risk Perception: What Really Drives Prices

What the Bitcoin market is currently facing is not a quantum threat, but a more direct market structure problem. Whale holders taking profits, increasing supply at the $100,000 level, and rebalancing asset allocation — these are the main drivers of the price action.

On the other hand, quantum threats, including Shore’s algorithm, should be recognized as long-term risk factors. Technical preparations such as BIP-360 are underway to prepare for the possibility of implementation decades in the future. Understanding this difference in timeframe is paramount in distinguishing market noise from intrinsic risk.

Confusing factors that cause the market to react in the short term with factors that technology responds to in the long term can lead to poor investment decisions. Protocol improvements such as Shore’s algorithm countermeasures and BIP-360 are already underway, ensuring ample time for their implementation.