Over 120,000 traders forced to liquidate! SEC Chair sparks fire, virtual currency "soars overnight"! "Deadly threat" emerges, what is the impact?

Virtual currency surges again

Last night, the virtual currency market continued to explode, with Bitcoin briefly surpassing $96,500 this morning, and Ethereum reaching $3,380. Other cryptocurrencies also experienced collective surges.
So, what exactly happened? Analysts believe there are three main reasons: First, on the 12th, SEC Chairman Paul Atkins stated on social platform X that this week is crucial for the cryptocurrency industry. Congress is about to upgrade the financial markets of the 21st century. Second, institutional demand has been reactivated. Third, the recent performance of the US dollar has been somewhat hesitant.
Meanwhile, some analysts also believe that recently, Bitcoin has decoupled for the first time from the global M2 supply. Behind this may be a deadly threat: quantum computing. Quantum computers are believed to have the ability to crack cryptocurrency encryption, and early blockchain wallets are especially vulnerable.

Collective surge
The long-dormant virtual currency market suddenly gained momentum last night, soaring sky-high. Bitcoin briefly broke through $96,500 this morning. Ethereum surged nearly 8%. In the past 24 hours, a total of 121,715 people worldwide have been liquidated, with total liquidation amounting to $685 million.

In addition to economic data, Ryan Rasmussen, head of research at Bitwise, also stated that the instability of the global political and economic environment has become a catalyst for Bitcoin, including the collapse of the Iranian currency and the political and economic situation in Venezuela. Moreover, the US Department of Justice has recently launched an investigation into Federal Reserve Chairman Powell, which is also seen as a factor affecting market sentiment. But there are three main reasons:

First, regulation ignited.

External reports from Barron's, Bitcoin News, and others indicate that Senate Banking Committee Chairman Tim Scott released an updated draft of the "Digital Asset Market Clarity Act" (CLARITY) on the 13th local time, which is expected to be submitted later this week for detailed review. This legislation, which concerns the structure of the cryptocurrency market, aims to establish clear rules for digital assets, protect retail investors, ensure future innovation, and safeguard national security.

Paul Atkins stated on social platform X: "This week is crucial for the cryptocurrency industry. Congress is about to upgrade the financial markets of the 21st century. Among the actions we can take for investors now, the most important is to bring digital assets out of regulatory gray areas."

Second, institutional allocation demand has increased.

Reports indicate that although confidence in Bitcoin purchases was not strong at the beginning of the year, and there were periods of continued hesitation, recent institutional market dynamics are beginning to paint a more positive picture. Net flows into Bitcoin ETFs show that after last week's outflows, early data for this week indicate capital inflows exceeding $100 million on January 12. This breaks the previous trend of outflows dominating the institutional market, suggesting that short-term buying interest is beginning to re-emerge. Meanwhile, open interest has also recovered to positive growth. This behavior indicates increasing liquidity, volatility, and participation in Bitcoin derivatives markets.

Third, the US dollar trend is weak.

US annual inflation data shows no additional inflationary pressure forcing the Federal Reserve to adopt more aggressive monetary policies. Therefore, the outlook for neutral or lower interest rates limits the dollar's ability to maintain stable buying in recent trading days. Currently, the DXY index, which measures the dollar against other currencies, is hovering around 99 points and has become noticeably stable, failing to generate new bullish momentum. The dollar's hesitation has increased the attractiveness of virtual currencies.

Retail investors have not yet returned, and threats have already appeared

Cryptocurrency analyst Darkfost pointed out that the liquidity withdrawal from Bitcoin spot ETFs has been the largest in history over the past period. Since reaching a record high in October last year, over $6 billion has flowed out, indicating a weakening of institutional capital momentum.

Additionally, the market currently lacks retail investor participation. CryptoQuant data shows that demand from small investors (with purchases between $0 and $10,000) is at extremely low levels, contrasting sharply with the scene during the bull market when retail investors flocked in. XWIN Research noted that net fund flows on exchanges remain low, indicating that investors are currently mostly on the sidelines, not aggressively chasing highs or taking profits.

Furthermore, the market has also noticed that Bitcoin has decoupled for the first time from the global M2 supply. In a recent article on X, Edwards, founder of Capriole Investments, discussed how Bitcoin has recently decoupled from global liquidity. Historically, the percentage change of this cryptocurrency year-over-year has been similar to global M2 supply trends. But Bitcoin's YoY change has been flat in 2025, while the total money supply of major global economies has increased, indicating that Bitcoin has diverged from traditional liquidity.

Edwards believes this is a threat posed by quantum computing to the network. Quantum computers are believed to have the ability to crack cryptocurrency encryption, and early blockchain wallets are especially vulnerable. It is currently uncertain when quantum machines will achieve breakthroughs, but Edwards, the founder of Capriole, believes BTC has entered the "quantum event horizon" in 2025.

In theory, parties with sufficiently advanced quantum computers could infiltrate dormant old wallets and sell them into the market. This would not only directly impact Bitcoin's price but could also undermine broader trust in cryptocurrencies themselves. However, some investors do not believe Edwards' inference.