The bear market has changed character

Tensions are rising across financial markets as geopolitical flashpoints flare up once more. Although Bitcoin remains unaffected so far, that does not mean nothing is happening: the market's focus is increasingly shifting from tearing down to building up. From Strategy getting its house in order to fresh progress on quantum security, this Market News shows how a bear market can slowly change its character.

Market update

Beyond the crypto market, plenty is brewing. AI stock prices are falling sharply, the major stock indexes are stagnating, and the conflict in Iran is flaring up again. Brent crude climbed to $102 per barrel last week, 45% higher than three weeks prior. Meanwhile, the 10-year US Treasury yield rose to 4.7%, its highest level since January 2025.

Bitcoin, meanwhile, has remained largely unfazed. Its price continues to ebb and flow with the wider market, but ultimately follows its own path. Characteristic of this bear market phase is that the conversation is shifting from problems to solutions. During the panic and capitulation of the first quarter, the outlook seemed bleak: quantum computers were expected to break Bitcoin's security, Strategy looked as though it might collapse, and the Trump administration appeared to view crypto as little more than a toy.

But bear markets are for building. Strategy has overhauled its policy framework and built up a dollar reserve of 3.2 billion, enough for almost two years of obligations. And US Treasury Secretary Scott Bessent described crypto as being of strategic geopolitical importance in a major speech.

We are not yet seeing that reflected in the price however. Investors who remain active are quietly building long-term positions. The wider market usually only returns when the bottom is unmistakably in the rearview mirror and prices are rising rapidly. A strong indication of this is a breakout above the €67,000 to €72,000 zone. That would put Bitcoin above its 50-week moving average, the volume-weighted average since the peak, and the local high reached on May 6.

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Bitcoin takes a step towards quantum resistance

For years, a potential threat has hung over the Bitcoin market. In the future, sufficiently powerful quantum computers could break the cryptography that underpins Bitcoin. Even if that moment is still far off, the uncertainty alone can weigh on Bitcoin's valuation. The more credible the threat, the greater the discount investors are likely to apply.

But the reverse is true as well. As it becomes clearer that the risk is being taken seriously and practical solutions are being developed, those concerns can begin to fade. And that is exactly what now appears to be happening.

Nobody knows exactly when quantum computers will become powerful enough to pose a threat to Bitcoin. Estimates range from the end of this decade to many years beyond. The risk itself is well understood, however: a sufficiently powerful quantum computer could derive the private keys of certain vulnerable bitcoin addresses, allowing the coins to be spent without the owner's permission.

Technically, this is not an insurmountable problem. So-called quantum-resistent algorithms already exist, and several potential pathways have been proposed for Bitcoin to migrate over to. The biggest challenge is primarily governance. Bitcoin has no central authority that can impose changes. Developers, users, miners, and companies must collectively gain consensus around a solution, and that process inevitably takes time.

That is why Galaxy Digital has committed to make up to $5 million available for developers and researchers working on quantum-resistant transactions and tools for a future migration. A specialist advisory board will oversee the research and grant program.

Two days later, an even broader collaboration was announced. Nine companies, including BlackRock, Fidelity, and Strategy, plan to jointly invest $15 million over the next three years in Bitcoin's security. Quantum security is a major part of that program, although other challenge will also be addressed. Each participating company will decide independently which projects and developers it supports.

This changes the nature of the quantum threat. The risk has not disappeared, and Bitcoin is not yet fully prepared for powerful quantum computers, but the industry is no longer standing still. Companies with significant exposure to Bitcoin are now investing capital, expertise, and time into research and development.

A threat that has long hung theoretically over the market is slowly moving towards a practical solution. The earlier those preparations begin, the greater the likelihood that Bitcoin can be upgraded before the threat becomes genuinely urgent.

In other news

1. Samsung Wallet to support stablecoins. The company made the announcement during Galaxy Unpacked in London. Samsung did not yet name a date, partners, or countries. USDC was visible in the presentation, but Circle has not confirmed any potential collaboration. If Samsung goes ahead with the plan, stablecoins could be brought to hundreds of millions of smartphone users. Samsung also unveiled its own payment card, issued by Barclays and powered by the Visa network.

2. Franklin Templeton sees AI agents as a reason to revisit altcoins. According to Sandy Kaul, Head of Digital Assets at the asset manager, existing payment systems are poorly suited for software that bills for data, computing power, or tools in fractions of cents. A card payment is too expensive and too slow for this purpose. Blockchains, by contrast, can process these machine payments, and for that, underlying tokens are needed. Franklin Templeton's message is clear: the AI investment story is not limited to equities.

3. Two well-known crypto exchanges are calling it a day. BitMEX will permanently close its exchange on September 23 and urges users to close positions and withdraw funds. Shortly thereafter, BitMart also announced its intention to cease trading. Both names belong to an older crypto era, with high leverage, rapid growth, and little room for error. BitMart was hacked in 2021 and has since struggled with operational issues. The sector is becoming more professional, but also more demanding. Not everyone will survive the transition to mature infrastructure. Temporary offer: Move your crypto to Bitvavo and earn up to 10% APY. Read more.

4. More than a billion Telegram users to receive a self-custody wallet. Founder Pavel Durov says the wallet should become available in all versions of Telegram this summer. Users would manage their private keys themselves and be able to send GRAM directly and without fees. GRAM is the currency of the blockchain network linked to Telegram. An exact launch date and technical details are still to come, but the potential reach is enormous. No self-custody wallet has ever been launched with such a vast built-in user base.

Satoshi Radio: In the latest episode of Satoshi Radio, trust is a common thread. One topic, for example, is the bankruptcy of Knaken and the gap that has emerged in its balance sheet. Another is the important lawsuit about the IPO of a Dutch bitcoin company. There's also a look at the future of the Clarity Act and a new initiative to make bitcoin more resistant to quantum computers. As always, the episode wraps up with a market update.

This article is for informational purposes only and does not constitute a marketing communication or recommendation. None of the content herein should be considered as investment advice or a substitute for it. Bitvavo makes no guarantees regarding the accuracy or completeness of the provided information. Investments involve risks. There is a possibility of losing your entire invested capital.