Wall Street broker Bernstein said the rise of quantum computing poses a credible but manageable threat to Bitcoin and the broader crypto ecosystem, as recent breakthroughs compress timelines for potential attacks on modern cryptography.

Advances such as Google Quantum AI’s reported reduction in qubit requirements suggest the risk is no longer a distant, decade-long concern, the broker noted. Still, the firm cautioned that scaling quantum systems to the level needed to break widely used encryption remains a complex, multi-step challenge.

“Quantum should be seen as a medium to long term system upgrade cycle rather than a risk,” analysts led by Gautam Chhugani said in the Wednesday report.

Quantum computing uses the principles of quantum mechanics rather than classical physics. Instead of binary bits, it relies on qubits that can exist in multiple states at once, a property known as superposition, allowing many possibilities to be processed simultaneously.

Combined with entanglement, this enables quantum systems to solve certain problems, such as breaking encryption, far more efficiently than classical computers.

Quantum computers could eventually weaken cryptographic systems like elliptic curve encryption, which underpin crypto wallets, by solving problems beyond the reach of classical machines. However, the report said the threat spans industries from finance to defense and should be viewed as a manageable, long-term risk rather than an existential one for Bitcoin.

Exposure is concentrated in roughly 1.7 million BTC held in older, “legacy” wallets, while newer practices and protocols reduce vulnerability. Bitcoin mining, which relies on SHA-based hashing, remains effectively secure even in advanced quantum scenarios, the broker said.

Bernstein expects the crypto industry to have sufficient time, around three to five years, to transition toward post-quantum cryptography, with upgrades such as new wallet standards, reduced address reuse and key rotation already under discussion.

One recent academic paper said that attacking the Bitcoin blockchain through quantum mining would demand the energy output of a star.

Read more: Attacking bitcoin mining with a quantum computer would require the energy of a star, academics say

• The accusation: Gracy Chen, Bitget CEO, publicly called Hyperliquid an ‘overmarketed’ fake DEX on April 7, warning of systemic risks comparable to FTX and describing it as an ‘offshore CEX with no KYC/AML.’
• The trigger: Hyperliquid’s small validator set unanimously delisted the JELLY memecoin perp market on March 26 and force-settled positions at $0.0095 after an attacker used a $6M short to exploit the HLP vault – exposing the platform’s centralized emergency override capability.
• The structural critique: Chen argued that Hyperliquid’s mixed vaults expose all users to collective risk from individual manipulators, and that foundation-level intervention in open markets sets a ‘dangerous precedent.’
• The volume context: Hyperliquid’s HYPE token and platform growth represent a direct threat to CEX perp revenue – making Chen’s critique land somewhere between principled concern and competitive self-interest.
• Industry split: BitMEX co-founder Arthur Hayes echoed decentralization concerns but downplayed long-term damage; Hyperliquid’s community pushed back hard, accusing Chen of conflating valid critique with CEX protectionism.
• What’s next: Hyperliquid has flagged validator expansions and HLP upgrades post-JELLY; Bitget’s Q2 2026 volume numbers will tell whether the controversy moved any market share.

Wall Street investment bank JPMorgan (JPM) said the pace of capital flowing into digital assets slowed markedly in the first quarter of 2026, with total inflows estimated at around $11 billion.

That implies an annualized run rate of roughly $44 billion, about one-third of the pace seen in 2025, according to the report published last week.

“Investor flows, either retail or institutional, have been small or even negative YTD with the bulk of the digital asset flow in Q1’26 stemming from Strategy’s (MSTR) bitcoin BTC$71,726.66 purchases and concentrated crypto VC funding,” wrote analysts led by Nikolaos Panigirtzoglou.

Crypto markets had a volatile and broadly negative first quarter, with prices and market value retreating sharply amid a risk-off backdrop. Total crypto market capitalization fell roughly 20% over the period, while bitcoin dropped around 23% and ether (ETH) declined more than 30%, marking one of the weakest first-quarter performances in years.

The selloff was driven by macroeconomic and geopolitical pressures, triggering liquidations and a broad pullback in risk assets, with altcoins hit even harder.

Despite the downturn, prices stabilized toward the end of the quarter, with bitcoin consolidating near the $70,000 level as ETF demand improved and some pockets of the market, such as select altcoins and onchain activity, showed resilience.

The bank’s estimate aggregates crypto fund flows, Chicago Mercantile Exchange (CME) futures positioning, venture capital fundraising and corporate treasury activity, including bitcoin BTC$71,726.66 purchases by firms such as Strategy.

The analysts said investor-driven flows were notably weak. Positioning in bitcoin and ether CME futures softened versus 2024 and 2025, suggesting institutional demand may have turned slightly negative year-to-date. Spot bitcoin and ether exchange-traded funds (ETFs) also saw net outflows during the quarter, concentrated in January, before a modest rebound in bitcoin ETF inflows in March.

The bank’s analysts attributed most of the quarter’s inflows to corporate treasury activity and venture funding. Strategy remained a dominant buyer, funding bitcoin purchases largely through equity issuance, while signaling continued reliance on stock and preferred issuance to finance accumulation. Other corporate holders were more defensive, with some selling bitcoin to fund buybacks.

Bitcoin miners were net sellers during the quarter, the report said, as firms sold holdings or used them as collateral to shore up liquidity, fund capital expenditures or manage liabilities. The analysts characterized the selling as driven by tighter financing conditions and balance sheet discipline rather than distress.

Crypto venture capital was a relative bright spot. Funding tracked an annualized pace above the prior two years, though activity was increasingly concentrated in fewer, larger deals led by established firms. Capital continued to rotate toward infrastructure, stablecoins, payments and tokenization, with less interest in gaming, non-fungible tokens (NFTs) and exchange-related projects, the report added.

Read more: Bitcoin holds ground as gold, silver slide on ETF outflows and liquidity strains: JPMorgan

Diplomatic Signals Revive Cheer in the Market

Authorities on both sides, as well as regional mediators, are still negotiating conditions of a temporary truce. In addition, the suggested ceasefire would open significant trade routes and take the strain off world markets. These news items favored returns in risk assets, such as cryptocurrencies and US stock futures. The US President Donald Trump spoke about the situation at a regular press conference, pointing to continuing negotiations. Moreover, he also prolonged a deadline concerning possible military intervention, which indicated the possibility of further negotiations. There was a response by market participants to these updates as de-escalation expectations rose.

The decrease in oil prices was caused by the expectation of a ceasefire, which reduced worries about supply disruption. Prices were on a downward swing, with energy markets showing improved mood. Therefore, the fall in oil prices helped the recovery of Bitcoin and the subsequent rise of the market. The surge in the value of Bitcoin to over 70,000 caused a run-up in the values of other leading digital currencies such as Ethereum, XRP, Solana and Cardano. Also, the wider crypto market saw high buying behaviour with prices rising accordingly. This collaborative action emphasised the impact of Bitcoin on the general market trend.

Due to the price explosion, there was a dramatic short sale in the derivatives market within a short time. Additionally, the volume of trading was high, indicating that more traders were involved. Statistics also revealed that there was an increase in futures open interest, meaning that more people are taking leveraged positions. The Strait of Hormuz remains a focal point of developments in the markets because of its significance in the oil supply in the world market. Also, any advancement in the negotiations can affect the energy market and financial market in the short term. This relationship continues to bind geopolitical events to crypto price changes.

South Korea’s ruling Democratic Party is reportedly preparing a draft bill that would classify stablecoins as foreign exchange payment instruments and require tokenized real-world assets (RWAs) to be backed by assets held in trust. 

Citing an integrated draft of the proposed Digital Asset Basic Act, the Seoul Economic Daily reported on Wednesday that stablecoins used in cross-border transactions would be treated as “means of payment” under the Foreign Exchange Transactions Act, placing related businesses under oversight even without separate registration.

The draft bill would also require issuers of tokenized RWAs to place underlying assets in managed trusts under the Capital Markets Act. 

If implemented, the changes would bring stablecoins and tokenized RWAs under existing financial rules, tightening oversight of cross-border flows and setting custody requirements for underlying assets.

Cointelegraph could not independently verify the draft provisions through a public National Assembly filing as of Wednesday. 

Stablecoin draft targets cross-border use, bans interest

The Seoul Economic Daily also reported that the draft would exempt certain stablecoin payments for goods and services from foreign exchange reporting requirements within a defined scope.  

The draft also reportedly bars issuers from paying interest to holders of value-stable digital assets, regardless of how the incentive is labeled. It would also require the Financial Services Commission to establish technical standards aimed at ensuring interoperability across digital asset networks, the report said.

Related: Crypto exchange Bithumb to delay IPO until after 2028: Report

The reported approach aligns with earlier concerns raised by South Korea’s central bank.

On Jan. 27, Bank of Korea Governor Lee Chang-yong warned that Korean won-denominated stablecoins could complicate capital-flow management and foreign exchange stability, adding to the debate over how domestic stablecoins should be regulated.

New draft would move tokenization into existing structures

On the RWA side, the draft would reportedly require issuers to place linked assets in managed trusts under the Capital Markets Act. The requirement would tie tokenized asset issuance to existing custody frameworks, according to the report. 

According to the report, key issues like exchange ownership limits and bank-related requirements for stablecoin issuers were not included in the draft.

The omissions come amid broader disagreements over how the bill should regulate stablecoins. On Dec. 31, disagreements over stablecoin oversight and issuer requirements had delayed the Digital Asset Basic Act.

Magazine: ‘Phantom Bitcoin’ checks, Drift hack linked to North Korea: Asia Express