Charles Edwards, the mind behind Capriole Investments, has shed light on the underlying factors contributing to Bitcoin’s recent lackluster performance. He argues that it’s not merely “loop theories” at play but rather significant threats posed by quantum computing and risks associated with debt-driven leverage (Digital Asset Treasures, DATs).
As discussions swirl in cryptocurrency circles regarding Bitcoin’s 40% underperformance compared to gold, a stark warning has emerged from esteemed macro analyst Charles Edwards. During his appearance on the Coin Bureau Podcast, he outlined several “existential” threats that are hindering Bitcoin from capturing a slice of the staggering $115 trillion liquidity available.
Edwards asserts that the primary reason for Bitcoin’s struggle against gold and equities is its vulnerability to quantum computing. He emphasizes that this threat has transitioned from being merely theoretical to an imminent risk within a defined timeframe. Specifically, he highlights 2025 to 2028 as crucial years when there could be a 20-30% chance of compromising Bitcoin’s current cryptographic techniques (ECC).
The analyst pointed out that major players like BlackRock have begun incorporating “quantum risk” clauses into their ETF documents while figures such as Vitalik Buterin have raised alarms about this issue. This suggests institutional investors are starting to factor in these risks into their strategies. Edwards contends that for Bitcoin to remain competitive with gold, it urgently requires an update (soft-fork) aimed at enhancing its resistance against quantum attacks; if executed effectively, this could propel Bitcoin ahead of gold swiftly.
Furthermore, Edwards highlighted how global money supply has surged to unprecedented levels—reaching $115 trillion—which allowed gold prices to rise by absorbing some of this liquidity. In contrast, he notes that Bitcoin faces pressure due primarily to debts incurred through Digital Asset Treasures (DATs).
The analyst observed nearly 200 companies akin to MicroStrategy have taken loans specifically for purchasing Bitcoin—a scenario reminiscent of pre-crash conditions in the late 1920s. The escalating debt levels pose risks for what he terms a “leveraged cascade,” potentially leading downwards volatility in Bitcoin’s price.
Addressing market sentiments surrounding anticipated halving cycles, Edwards remarked: “The four-year cycle is now obsolete.” He believes that currently more than ever before; bitcoin relies heavily on macroeconomic liquidity and institutional interest rather than miner activity cycles alone. Consequently, he cautioned investors:
“Should quantum risk remain unaddressed this year; we may see continued superior performance from gold over bitcoin. Conversely if an actionable plan emerges soon enough then any existing ‘risk discount’ tied up with bitcoin will evaporate leading towards significant upward momentum.”
*This does not constitute investment advice.