Bernstein: Bitcoin Market Has Priced In Quantum Risk

Bernstein wrote Monday that Bitcoin’s recent price drop has already reflected much of the market’s concern about quantum-computing threats, and that core developers and large holders have roughly three to five years to plan and implement post-quantum upgrades.

The firm pointed to Bitcoin’s nearly 50% decline from its $126,198 all-time high in October 2025 as evidence that investors are accounting for several risks tied to a potential quantum breakthrough. The note highlighted parallel advances in zero-knowledge privacy techniques and quantum-resistant cryptography as technical developments that reduce overall exposure.

Researchers recently estimated that some quantum computer designs could break the elliptic-curve cryptography used by many blockchains with fewer than 500,000 physical qubits. In a theoretical scenario cited by researchers, a quantum device could derive a Bitcoin private key in about nine minutes, which is shorter than Bitcoin’s typical 10-minute block production interval. That calculation has renewed discussion about how quickly the protocol needs an upgrade path.

Bernstein’s analysis described BIP-360 as one proposal gaining attention. BIP-360 would add a Pay-to-Merkle-Root output type intended to remove Taproot’s key-path vulnerability and reduce long-term quantum exposure. The firm noted the proposal could be deployed as a soft fork for currently exposed addresses but would not introduce post-quantum digital signatures and would leave about 8% of the BTC supply in inactive addresses still vulnerable to a future breakthrough.

The note expects large institutional holders, including exchange-traded fund issuers and corporate treasury buyers, to take an active role in building consensus on a post-quantum path. It also described developers’ cautious approach to protocol change as a measured response when dealing with a large, widely held asset.

Arthur Breitman, co-founder of Tezos, told attendees at EthCC 2026 that the software work to add quantum-resistant standards could be completed quickly, but moving billions of private keys across wallets and custodial services will take years. “If Bitcoin needed to migrate in the next month, they could do it from a technical perspective,” he said. “But they can’t get everyone to migrate their key in a month. It’s going to take years for people to properly migrate their keys.”

Zach Pandl, head of research at Grayscale, described the challenge as more social than technical and noted that Bitcoin’s UTXO model and some address types narrow the scope of vulnerability. He warned that the community must also decide how to handle wallets where private keys are lost or inaccessible.

Bitcoin’s current security depends on elliptic-curve cryptography for private keys and digital signatures. Researchers’ timelines for quantum capability vary, and planned responses include cryptographic upgrades, address migration strategies and coordination among developers, custodians and institutional holders to reduce quantum risk over the coming years.