Jefferies Analyst Dumps Bitcoin Over Quantum Fears

Christopher Wood, the global head of equity strategy at Jefferies, has made a significant shift in his flagship investment model. The strategist has completely removed Bitcoin from the portfolio, citing concerns over quantum computing's potential to disrupt the cryptocurrency's security.

The decision marks a notable pivot for Wood, who was an early institutional supporter of Bitcoin. He first added the digital asset to his Greed & Fear model portfolio in December 2020 and increased the allocation to 10% in 2021. Now, he is replacing that exposure with traditional safe-haven assets.

According to the latest edition of his widely followed newsletter, Wood confirmed that Jefferies has eliminated its entire 10% Bitcoin allocation. In its place, the portfolio now holds a split allocation of 5% to physical gold and 5% to gold-mining equities.

The strategist explained that the move reflects rising uncertainty about Bitcoin's ability to maintain its role as a long-term store of value. While he does not believe the quantum issue will dramatically impact Bitcoin prices in the near term, the foundation of the store-of-value concept appears less solid for long-term pension portfolios.

"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 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 confidence in the network.

Security researchers estimate that a significant portion of Bitcoin's total supply could be vulnerable under certain conditions. The issue has sparked a growing divide within the Bitcoin ecosystem:

• Some analysts believe developers are underestimating the risk
• Others maintain the threat remains distant
• Preparatory work toward quantum-resistant signatures is underway

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.

The debate has begun to reach mainstream finance. BlackRock has listed quantum computing as a potential long-term risk in its spot Bitcoin ETF disclosures. Meanwhile, Solana co-founder Anatoly Yakovenko recently suggested there is a 50% chance of a meaningful quantum breakthrough within five years.

Within the Bitcoin community, Blockstream CEO Adam Back maintains that the threat remains distant. He argues that quiet preparatory work toward quantum-resistant signatures is preferable to alarming investors with premature warnings.

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 has climbed to record highs this month, topping $4,600 per ounce. Investors have 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.

The timing of Wood's shift coincides with gold's strong performance. Since his initial Bitcoin inclusion in December 2020, Bitcoin has risen approximately 325%, compared with a 145% gain in gold over the same period. Despite Bitcoin's superior returns during that timeframe, Wood's decision prioritizes long-term security over recent performance.

Wood's decision highlights a growing tension between technological innovation and traditional investment principles. As quantum computing advances, institutional investors may increasingly weigh cryptographic risks against potential returns.

The move also underscores gold's enduring appeal as a store of value. While Bitcoin has captured attention with its dramatic gains, gold's centuries-long track record continues to attract investors seeking stability in uncertain times.

For now, the debate over quantum computing's impact on Bitcoin remains unresolved. However, Wood's portfolio shift signals that some institutional investors are unwilling to wait for certainty before protecting their long-term positions.