Bitcoin is trading near the lower bounds of its recent range.
Renewed anxiety over corporate profits and lingering uncertainty over US tariffs are squelching risk appetites across global markets.
Meanwhile, Bitcoin's slide has wiped out all gains seen since the November 2024 election.
And despite reaching a record price above $126,000 last October, over $2 trillion in total market value have been wiped out since the record peak in October 2025, and US listed spot bitcoin funds recorded their fifth consecutive week of net outflows totaling $3.8 billion as investors pull back.
Also beyond the price volatility, the community is now divided over the threat of quantum computers exposing 7 million coins, including $1 million.
Attributed to Satoshi Nakamoto will joining me this morning to weigh in as James Butterfield, head of research at coins shares.
James, good morning.
Thank you so much for joining us.
Well in New York morning trade, we are looking at Bitcoin prices holding right below 64,000.
But how are you navigating this volatility and tell us what you think that contributed to the sell off we saw earlier this month.
Yes, well, there's, I think a whole combination of factors influencing prices.
The primary one is this, uh, whale sell-off.
Wales have sold since October around $30 billion worth of Bitcoin.
They believe in this 4-year cycle, and, um, at this point in the cycle, Bitcoin has historically tended to sell off.
So they're selling, uh, to re-enter at a later date.
And that doesn't, if you believe in that cycle narrative, then we don't really see any sort of let up from until around April, May time.
So it looks like there'll still be further price weakness.
And then adding to that is, I suppose, a more slightly more hawkish Fed Governor, Kevin, Kevin Warsh, the appointment of him, he's focusing much more on inflation.
That Bitcoin price has moved quite closely to monetary policy expectations.
So more hawkish has, has not been great for Bitcoin.
And this has led to the, the, um, the exit of basis traders, and that's why we've seen.
Um, around $4.3 billion of outflows over the last five weeks.
Um, so that negative price momentum, I think, is exacerbating everything really.
And then combined with all of that is the, the worries over Iran and a potential strike there and concerns over growth, um, all leading to a kind of a perfect storm really for, for Bitcoin prices.
Yeah, and James, there are a lot of analyses out there from both the fundamental side as well as technical side when it comes to Bitcoin, but without a crystal ball, we don't know what's going to happen.
At the same time, I do want to ask you, could this be the bottom, or is there another key technical level that you are watching for the crypto major?
There's one technical level that many people don't look at called realized value, and that suggests around 55,000 is possible.
Although I'd say we're probably very close to the lows, looking at some other technical indicators like RSI relative strength, uh, that hit 16 about a month ago, and historically the only last time it did, the last time it did that was in 2022.
So, um, but prices didn't really recover from that point for another six months.
I think, uh, that in combination with the sort of weaker sentiment, the whale flows, etc. it does suggest.
You know, we're not going to see any meaningful price appreciation for at least another couple of months.
And of course a lot of focus on the institutional holders of crypto in particular the crypto majors and what they're doing.
So tell us what's happening below the surface and how much the liquidation of leverage positions contributed to the early February selloff and where do we actually go from here.
Yeah, leverage reached about, so equity leverage averages around 20, 21% on the S&P 500.
In Bitcoin, it averages around 25%, and it had peaked at around 31%, and it's fallen to around 21%.
So quite a significant amount of deleveraging going on.
Um, it could fall further, it could fall to around 20, 19% at that point.
Um.
You know, we've seen, if you look at, uh, the options market on the CME you can see, um, open interest has fallen to around 7.6 billion, so nearly to the same sort of levels when the ETFs were launched back in 2024.
And James, finally, before I let you go, I do want to ask you about the threat of quantum computers, and we've been seeing a lot of reports as well as a lot of opinions out there on social media.
But tell us about the reality of quantum computers actually breaking cryptography and how This could expose quite the pretty penny in assets.
So should the protocol actually be changed to protect at-risk coins, or do you think this intervention could potentially destroy the core value of an immutable ledger?
Walk, walk us through this, and can you explain this in layman terms?
Alright, I'll try not to get too geeky here, but.
Yeah, it's ultimately people have said that Bitcoin's vulnerable to quantum computing and people should know better.
Um, there are some early wallets, including Satoshi Nakamoto's, that are vulnerable because they use this type of elliptic curve cryptography that can be cracked on the advent of quantum computing.
But just to put that in perspective, you know, Google's reached around 100 cubits.
We'd probably need 200,000 cubits.
To, to achieve that.
So there's probably a good amount of time to fix some of these problems.
We think from up to around 6 to 8% of Bitcoin's supply is vulnerable to this type of ECDSA um hack, um, but there's already proposals being put forward, uh, in this thing called BIP 3 360 to, to deal with this problem.
Um, so I think it's a little bit of a storm in a teacup, so to speak.
And it probably has added to recent downwards price pressure.
Well, James, we will have to leave it there for today, but thank you so much for joining us and thank you so much for sharing all of your insights as well as your perspective.
