The crypto market is heading into another important phase, with developments spanning Bitcoin security, US regulation and institutional market forecasts.
Today’s major stories include StarkWare’s demonstration of an experimental quantum-resistant Bitcoin transaction on mainnet, the US Securities and Exchange Commission’s move to advance a proposed crypto custody framework into White House review, and Bernstein’s projection that Bitcoin could return to $125,000 by the end of 2026.
StarkWare Demonstrates Experimental Quantum-Resistant Bitcoin Transaction
StarkWare researcher Avihu Levy has demonstrated a new experimental method designed to protect Bitcoin transactions against potential future quantum-computing attacks.
The transaction was confirmed on the Bitcoin mainnet in block 964,199, according to StarkWare and blockchain data. The transaction used a 10,000-satoshi output secured through Levy’s Quantum Safe Bitcoin (QSB) construction. MARA Pool mined the block after the transaction was submitted through its Slipstream service.
The significance of the test lies in how the transaction was processed. QSB operates within Bitcoin’s existing consensus framework, meaning the demonstration did not require a soft fork, new opcode or changes to Bitcoin’s underlying rules.
Bitcoin currently relies heavily on elliptic-curve cryptography for transaction authorization. A sufficiently advanced quantum computer could theoretically use algorithms such as Shor’s algorithm to derive private keys from exposed public keys.
QSB attempts to address that potential weakness by shifting the security foundation toward hash-based cryptographic techniques. The system combines one-time signatures with computational work that links authorization to a particular transaction.
The mainnet demonstration does not mean Bitcoin has suddenly become fully quantum-resistant. Instead, it provides evidence that an alternative spending mechanism can function under Bitcoin’s current rules.
Levy’s work therefore represents a practical experiment in how Bitcoin holders might eventually migrate vulnerable coins to stronger cryptographic protections without immediately requiring a network-wide upgrade.
SEC Moves Crypto Custody Proposal Into White House Review
The US Securities and Exchange Commission (SEC) is also advancing a major regulatory initiative that could affect how investment advisers and funds manage digital assets.
The agency submitted its proposed crypto custody rule overhaul to the Office of Management and Budget (OMB) on Aug. 25 for regulatory review.
The proposal has not yet been released publicly. OMB can request revisions before returning the proposal to the SEC, after which the commission would have to vote on whether to publish it for public comment.
The planned changes could modify existing requirements or introduce new provisions under the Investment Advisers Act and Investment Company Act.
For the cryptocurrency industry, the potential significance is considerable. Investment advisers and institutional investment vehicles have faced uncertainty over how digital assets can be held, safeguarded and administered while remaining compliant with federal securities regulations.
A clearer framework could make it easier for regulated financial firms to develop crypto custody services and potentially expand institutional participation.
The initiative also reflects the SEC’s broader shift toward formal rulemaking for digital assets under Chair Paul Atkins, replacing some of the enforcement-focused approach associated with the previous regulatory environment.
The custody proposal comes as the Trump administration continues pursuing broader digital-asset policy objectives, while the CLARITY market-structure legislation remains under consideration in the Senate.
Bernstein Sees Bitcoin Returning to $125,000
Bitcoin’s longer-term outlook remains bullish in a new assessment from Wall Street research firm Bernstein.
The firm expects Bitcoin to recover from its latest decline and potentially return to the $125,000 level by the end of 2026 under both its base-case and more optimistic scenario.
The forecast comes after Bitcoin experienced a significant correction from its 2025 peak before staging a substantial rebound.
Bernstein highlighted the changing composition of the Bitcoin market as an important factor. Institutional investors, publicly traded companies and other large-scale buyers now represent a much greater portion of demand than during previous market cycles.
According to the research, this institutional participation could provide greater support during periods of heavy selling and help reduce the severity of future downturns.
Historically, Bitcoin has experienced drawdowns of 75% to 90% during major bear markets. Bernstein believes the market structure has evolved enough that future corrections may be less extreme.
The analysts also view the recent recovery as potentially signaling that the current bearish phase is losing momentum.
However, reaching $125,000 would still require renewed demand, improved liquidity and sustained investor confidence. Bitcoin’s historical volatility means that forecasts remain highly sensitive to macroeconomic conditions and broader risk appetite.
Three Developments Shaping Bitcoin’s Next Phase
The three developments highlight different forces influencing Bitcoin and the wider crypto industry.
Technology: QSB demonstrates that researchers are already exploring ways to prepare Bitcoin for a possible quantum-computing threat.
Regulation: The SEC’s custody initiative could provide institutional investors with clearer rules for holding digital assets.
Markets: Bernstein’s $125,000 projection reflects growing confidence that institutional participation has fundamentally changed Bitcoin’s market structure.
Together, they point toward an industry moving beyond its earlier focus on retail speculation. Bitcoin is increasingly being shaped by cryptographic research, regulated financial infrastructure and institutional capital.
The quantum-safe transaction remains an experimental proof of concept, the SEC custody framework still requires several regulatory steps, and Bernstein’s price target is only a forecast. But each development offers a glimpse into the issues likely to define Bitcoin’s next stage of adoption.
