Jefferies Analyst Dumps Bitcoin: Asset Reallocation Driven by Quantum Fears
Christopher Wood, global head of equity strategy at Jefferies, has removed Bitcoin entirely from his flagship Greed & Fear model portfolio, replacing the 10% allocation with 5% physical gold and 5% gold-mining equities, according to Bloomberg. He cited concerns that advances in quantum computing could pose an existential threat to Bitcoin's cryptographic foundations.
In the latest edition of the widely followed newsletter, Wood wrote, “While Greed & Fear does not believe that the quantum issue is about to hit the Bitcoin price dramatically in the near term, the store-of-value concept is clearly on less solid foundation from the standpoint of a long-term pension portfolio.” Wood was an early institutional supporter, first adding Bitcoin in December 2020 amid pandemic stimulus and fiat debasement fears, later raising the allocation to 10% in 2021. Since then, Bitcoin has gained approximately 325%, versus a 145% rise in gold over the same period.
Why Quantum Computing Threatens Bitcoin’s Security
Despite Bitcoin’s strong performance, Wood argues that quantum computing presents a structural risk that cannot be ignored. Bitcoin’s security relies on cryptographic algorithms that are effectively unbreakable using classical computers. However, sufficiently powerful quantum machines could theoretically derive private keys from public keys, enabling unauthorized transfers and undermining network confidence.
Security researchers estimate that roughly 20% to 50% of Bitcoin’s total supply—between 4 million and 10 million BTC—could be vulnerable under certain conditions. Coinbase researchers have identified approximately 6.5 million BTC held in older wallet formats where public keys are already exposed on-chain, making them susceptible to so-called long-range quantum attacks.
Divisions in the Bitcoin Ecosystem and Wall Street’s Alert
The quantum threat has sparked a growing divide within the Bitcoin ecosystem. Some developers believe the risk is underestimated, while others—including Blockstream CEO Adam Back—maintain that the threat remains distant and that quiet preparatory work toward quantum-resistant signatures is preferable to alarming investors. Back stated that developers favor a calm, behind-the-scenes approach to developing quantum-resistant signatures rather than triggering market panic.
The debate has entered mainstream finance. BlackRock has listed quantum computing as a potential long-term risk in its spot Bitcoin ETF disclosures. Solana co-founder Anatoly Yakovenko recently suggested there is a 50% chance of a meaningful quantum breakthrough within five years.
Gold as the Alternative: Geopolitical and Monetary Policy Support
For Wood, the uncertainty itself strengthens the case for gold. He described the metal as a historically tested hedge in an increasingly volatile geopolitical and technological landscape, concluding that the long-term questions raised by quantum computing are “only positive for gold.”
Gold climbed to record highs this month, topping $4,600 per ounce, as investors piled into the safe-haven asset amid escalating geopolitical tensions involving Iran and growing expectations that the Federal Reserve will cut interest rates following softer U.S. inflation and labor market data.