AI’s Edge: Outsmarting Crypto Encryption Before Quantum Takes Charge

Morning Minute is a daily newsletter authored by Tyler Warner, whose analysis and viewpoints are his own and do not necessarily represent those of Decrypt. Also, be sure to check out our daily news show ‘FOMO HOUR’, where we cover all major headlines and market movements.

Headlines:

• Major cryptocurrencies drop by another 2-3%, Bitcoin currently at $82.6k.
• ETH researcher Justin Drake raises alarms about AI hacking risks, suggesting a “Bunker Mode.”
• Bitcoin ETFs experience highest outflows since late June.
• Tom Lee indicated he would halt Ethereum purchases when his holdings hit 5%, a milestone expected soon.
• Near Intents introduces Confidential Intents on DarkSwap via Solana, leading to a 169% price surge.

BitcoinBTC · USD

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$86.8k$84.8k$82.8k$80.7k

24h HighHigh$83,459

24h LowLow$80,427

VolVol$1.8B

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🔐 Ethereum Research Lead Warns AI Could Break Crypto Security Before Quantum Risks Arise

Justin Drake, a researcher at the Ethereum Foundation, has long cautioned that quantum computing may one day compromise the security of crypto wallets. However, he expressed a more urgent concern this week: that AI might achieve this feat even sooner, potentially within just a few months.

Drake urged the crypto community to start preparing for a scenario he terms “bunker mode.” He recommended transferring cryptocurrencies to new addresses that have never executed a transaction.

This issue carries significant implications. Each wallet has a private key that is kept confidential and a public key derived from it. The public key is obscured until a transaction is made, at which point it becomes permanently visible on the blockchain. If anyone can reverse-engineer a public key to unveil its private key, then every wallet that has processed a transaction would be at risk, while wallets that have only received funds remain safe.

The algorithm responsible for this cryptographic security is called ECDSA, which is foundational for both Bitcoin and Ethereum. Drake posits that it is plausible to prepare for vulnerabilities to arise before quantum technologies become prevalent, predicting potentially severe repercussions within a matter of months instead of years. By “breaking,” he denotes the ability to recover someone’s private key within a week utilizing a powerful array of graphic processing units.

What shifted his perspective is the velocity at which AI tackles complex equations. He cited 722 mathematical breakthroughs published by OpenAI earlier this week. He theorizes that elliptic curves, which form the basis of ECDSA, possess intricate patterns that a highly advanced AI might exploit, contrary to the hashing methods that conceal public keys, which are designed to endure such attacks.

He named several platforms, including Binance, Bitbank, Robinhood, Bitfinex, and Tether, urging them to bolster their cold storage solutions. Additionally, he provided some reassurance to smaller holders, mentioning that approximately 20,000 addresses linked to Bitcoin’s creator, each holding 50 BTC with visible public keys, are vulnerable. Anyone who manages to crack these could very well prioritize them, a safeguard Drake labels as Satoshi’s shield.

What does this mean for us? Drake emphasizes not to panic or rush into decisions, but rather to initiate the transition of self-custodied cryptocurrency to new, secure wallets. Alternatives exist, such as utilizing ETFs or established custodians like Coinbase. For those who prefer to maintain their own keys, collaborating with specialists to adopt best security practices is advisable.

Taking proactive measures is likely better than remaining passive and hoping for things to improve…

🌎 Macro Crypto and Markets

• Major cryptocurrencies are down, decreasing another 2-3%; BTC at $82.6k (-1%); ETH at $2,540 (-2%); SOL at $114 (-3%); HYPE at $86 (-4%); ZEC at $1,210 (-8%).
• Significant altcoin gainers include JUP (+16%), ALGO (+15%), STRK (+21%), and RAY (+7%).
• Oil prices rose by 3%, currently at $93; Gold remains steady at $4,140.
• Stock futures are showing red as oil and bond prices increase; DOW is down by 0.9%, Nasdaq down by 0.8%.
• Tom Lee announced that Bitmine will cease purchasing Ethereum once their holdings reach 5% of the total supply, roughly 100,000 ETH away; ETH dropped around 5% following this news, as Bitmine has made acquisitions weekly since June 2025.
• French Hill, Chair of the House Financial Services, claimed existing SEC and CFTC regulations are insufficient despite acknowledging both agencies’ efforts; he stressed that only new legislation can provide lasting clarity and expressed hopes to pass the Clarity Act during the lame-duck session.
• The government transferred $103 million worth of seized cryptocurrency on Tuesday moving 833.6 Bitcoin to Coinbase Prime and 40,285 BNB to a new address; some of these Bitcoins are traceable back to the Bitfinex hack and other fraud cases.
• According to Europol, crypto wallets present a significant vulnerability in potential quantum attacks in two reports released Wednesday; Europol concluded that while crypto won’t collapse, wallets that have already revealed their public keys cannot be salvaged and must relocate their funds ahead of any assaults.
• Wells Fargo is reportedly negotiating with the parent company of Kraken to provide liquidity for crypto trading, as per two sources; the bank will maintain its customer relationships while Payward manages pricing and execution.
• Polygon has integrated Tron support into its payment infrastructure, facilitating access to the $94 billion worth of USDT on that network; this allows companies to transact with Tether across both Tron and Ethereum-style networks through one seamless integration.
• Gate has posited that an all-in-one financial application is the leading trend in the consumer crypto market for this year and the next, suggesting that users prefer a singular platform for spending, saving, and trading rather than multiple applications.

Corporate Treasuries & ETFs

Meme Coin Tracker

• Meme top performers saw declines; DOGE down 3%, SHIB down 2%, PEPE down 1%, PENGU down 1%, TRUMP steady, SPX down 6%, BONK down 1%.
• Robinhood chain performers also fell; Pons down 5% to $260M; AI down 12% at $108M; Cashcat down 7% at $120M; top movers included Hookr (+60%), ZZZ (+27%), and Bucket (+60%).
• Solana’s top performers included MET (+50%), Dark (+165%), Crawl (+40%), and Stupid Inu (+160%).

💰 Token, Airdrop & Protocol Tracker

• Hyperliquid led other protocols on-chain in daily revenue, generating $2.77M, followed by Pumpfun at $2.57M and Stonk with $428k.
• Hyperliquid’s Jeff Yan stated he would develop an options product if starting from scratch today, expressing that he believes perpetual contracts may not retain options traders; he suggested HIP-4 offers pathways for builders leveraging Hyperliquid’s current order book and margin framework while utilizing perpetuals to hedge risk.
• Hyperliquid Labs unstaked 3.75 million HYPE tokens valued at approximately $330 million, distributing half to five private buyers in a record team distribution; these tokens are being handed over to one undisclosed institution as opposed to being sold on exchanges.
• Near Intents introduced Confidential Intents on DarkSwap, enabling confidential swaps on Solana; this news propelled DARK’s price by 169%.

🚚 Updates in the NFT Sector

• NFT major players showed a mixed performance; Punks stable at 33 ETH, BAYC up 4% at 6.06 ETH, Pudgy down 8% at 2.88 ETH.
• Claus (+120%) and Trace (+19%) led on the charts among top movers.