- Analysts warn quantum computing could unlock up to 4M lost BTC
- A sudden supply shock would hit liquidity and investor psychology
- Markets often discount tail risks long before they materialize
The idea sounds almost futuristic, but it’s starting to creep into serious market discussions. Analyst Willy Woo argues that Bitcoin may already be trading with a subtle discount because of quantum computing risk. If quantum machines advance far enough to break older cryptographic address schemes, coins long assumed to be permanently lost could, at least in theory, become spendable again.
Estimates suggest roughly 4 million BTC fall into this category, early-era coins sitting on legacy addresses with weaker cryptographic protection. Those coins are not part of circulating liquidity today. But if even a fraction were suddenly unlocked, the market wouldn’t see it as “recovered history.” It would see new supply.
Markets Price Tail Risks Before They Arrive
Bitcoin’s value proposition has always leaned heavily on fixed supply. That 21 million cap is central to the narrative, especially when compared to fiat systems. But quantum vulnerability introduces a wrinkle that gold simply doesn’t have. Gold cannot be hacked into existence, and that distinction matters for institutional allocators modeling worst-case scenarios.
Markets are known to price in tail risks well before they happen. Regulatory bans, ETF approvals, exchange collapses, interest rate shifts, these possibilities often compress or expand valuations long before the event itself becomes real. The question is whether quantum computing belongs in that same category of early-priced fear.
If large capital allocators believe there is even a remote chance of a future supply shock, they may adjust their models accordingly. Not dramatically, perhaps, but enough to create a structural discount versus assets without technological obsolescence risk.
What Happens If Quantum Risk Becomes Reality
If quantum-vulnerable coins were actually cracked and sold, the immediate impact would likely be sharp volatility. It wouldn’t be new issuance, but it would feel like it, because dormant supply would suddenly become liquid. Markets tend to react aggressively to unexpected liquidity shifts, especially in assets built on scarcity narratives.
That said, Bitcoin is not static. Protocol upgrades to quantum-resistant cryptography are technically possible, and migration paths could be introduced to protect active wallets. The network has evolved before under pressure. The deeper threat is less about raw supply and more about trust. Once the perception of absolute cryptographic security is shaken, rebuilding confidence takes time.
Is Bitcoin Being Undervalued or Rationally Discounted
The uncomfortable part of this debate is that both sides might have a point. If quantum computing never reaches the level required to break Bitcoin’s cryptography, any structural discount tied to that fear could unwind over time. In that case, the market may look back and see the concern as overblown.
But if the risk is even partially credible, pricing it in early is not irrational. Financial markets rarely wait for confirmation before adjusting valuations. They move on probabilities, not certainties. Whether Bitcoin is being unfairly discounted or rationally priced for a distant technological threat may depend on how fast quantum progress actually unfolds.
