Altcoins plunged in the early morning, is it a short-term correction or the peak of the cycle?

Original | Odaily Planet Daily ( @OdailyChina )

Author: Azuma ( @azuma_eth )

Around 5:00 am Beijing time on December 10, with the short-term decline of BTC and ETH, the altcoin sector, which had been strong for nearly half a month, also collectively plunged.

• OKX market data shows that BTC fell to a minimum of 94,000 USDT, and is currently (around 9:00, the following market data is based on this time point) reported at 97,783.4 USDT, a 24-hour drop of 2.03%; ETH fell to a minimum of 3,465.83 USDT, and is currently reported at 3,761.79 USDT, a 24-hour drop of 5.45%; SOL fell to a minimum of 200.95 USDT, and is currently reported at 218.31 USDT, a 24-hour drop of 6.97%.

• Among the top 100 cryptocurrencies by market capitalization, except for single-digit cryptocurrencies such as SOS, ENA, and the new coin MOVE, all other cryptocurrencies are in a state of decline, with the decline generally exceeding 10%. WLD (-19.4%), GALA (-18.7%), FIL (-18.3%), JUP (-17.9%), TIA (-17.7%), etc. are in the leading position of decline.

According to CoinGecko data, the total market value of cryptocurrencies has fallen back to $3.65 trillion, a 7.5% drop in 24 hours. Despite the sharp drop, the current trading enthusiasm of crypto users is still high. Alternatives Fear and Greed Index reported 78 today, and the level remains extreme greed.

In terms of derivatives trading, Coinglass data shows that the total liquidation of the entire network in the past 24 hours was US$1.719 billion, of which BTC liquidation was US$568 million and ETH liquidation was US$243 million. It is worth mentioning that, unlike the relatively balanced distribution of long and short liquidations during the short-term correction on November 26, the amount of long liquidations this time was as high as US$1.551 billion, accounting for more than 90%, which shows that the bulls have suffered a heavy blow in this mornings correction.

Reason for the decline: Is the quantum threat theory resurfacing?

There is no clear conclusion as to the cause of this decline, but many discussions in the industry point to a development made by Google this morning. On Monday local time, Google announced on its official blog the launch of its latest quantum chip, Willow, which it claims can complete calculations that would take current top computers 10,000,000,000,000,000,000,000,000,000 years (10 to the 25th power) to complete in less than five minutes .

The quantum threat theory is no longer a new issue for the cryptocurrency industry, but when technology giants use such intimidating rhetoric to promote new products, it will still cause a certain panic effect on the market.

However, many professionals from leading project owners and investment institutions have come out to clarify that the development of quantum computing is unlikely to pose a threat to the cryptocurrency industry in the short term.

Emin Gün Sirer, founder of Avalanche and a well-known academic leader, said this morning that the latest developments in quantum computing are indeed amazing, but at least they do not pose a threat to the security of cryptocurrencies for now. Current quantum computing is only suitable for performing a few types of work such as digital factorization, and cannot do things like reversing one-way hash functions. The designs of mainstream blockchains, including Bitcoin and Avalanche, all have a certain degree of quantum resistance, and the public key is exposed for a short time, leaving a short computing window for attackers. Therefore, quantum computing will not threaten cryptocurrencies in the short term. In the future, when the quantum threat really comes, blockchains such as Avalanche can also quickly add quantum-resistant signatures.

Dragonfly partner Haseeb Qureshi also responded to Professor Gun and gave a similar explanation, and posted a Metaculus research report stating that Shors algorithm is expected to take until around 2040 to crack the RSA key for the first time.

However, when Haseeb replied, Professor Gun gave a rather scary reply: Haseeb reminded me that Satoshi Nakamotos 1 million bitcoins may indeed have quantum threat issues. Early Bitcoin used a very old Pay-To-Public-Key format, which leaks the public key and gives attackers time to delve into it, which is the source of all crypto bounties. Modern Bitcoin wallets or modern systems such as Avalanche do not use P2P K, but it did exist in the early stages of Bitcoin. Therefore, as the quantum threat intensifies, the Bitcoin community may need to consider freezing Satoshi Nakamotos 1 million bitcoins, or more generally, providing a final date and freezing all bitcoins on P2P K UTXO.

Other explanations: Bitfinex whales clear out

Putting aside the news, some other analyses have explained this mornings decline from the perspective of market structure.

Benson Sun, founder of the data analysis platform CoinKarma , predicted yesterday in his personal account X that the performance of ETH/BTC may turn weak in the future. Given that the current trend of altcoins is more correlated with ETH, this may serve as a reference for the reason for the decline this morning.

Benson combined historical market analysis and said that in each past cycle, whenever the ETH/BTC long whales on Bitfinex cleared their positions, ETH would peak in the short term, and yesterday these whales had just cleared their long positions accumulated since August.

The signal of bottom-fishing is obvious, is there still hope for the future market?

For investors, a relatively favorable sign at the moment is that with the sharp short-term market correction, OTC transactions of USDT on mainstream trading platforms have shown a significant premium, which may mean that the bottom-fishing sentiment is still strong and the market is still optimistic about the future trend.

Whales have also been detected to be bottom-fishing. On-chain analyst @ai_9684 xtpa monitoring pointed out that the band winning rate is 84.2%. Whales bottomed out again when the market plummeted in the early morning of today, buying 7,682 WETH (worth 29.22 million US dollars) at an average price of US$3,803; the number of this band has increased to 11,687 ETH, with an average cost of US$3,861.

The bull market seems to be continuing. In the past bull market practices, buy every dip was the main strategy for many investors to make profits. This time, no one knows whether the same script will be played out again. Please make careful judgments, pay attention to risks, and DYOR.