Jefferies' Analyst Dumps Bitcoin Over Quantum Computing Fears, Buys Gold

Christopher Wood, global head of equity strategy at Jefferies, has removed a 10% Bitcoin allocation from his model portfolio. The decision follows growing concerns that advancements in quantum computing could undermine Bitcoin's cryptographic security. Wood cited these risks as a key factor in his strategic shift, emphasizing the potential threat to Bitcoin's role as a store of value.

Wood's portfolio reallocation includes replacing the Bitcoin position with 5% in physical gold and 5% in gold-mining equities. He described gold as a historically stress-tested store of value, a position that contrasts with his prior bullish stance on Bitcoin.

The move marks a reversal from Wood's previous investments, which included adding Bitcoin to his portfolio in December 2020 and November 2021. The strategic shift highlights the evolving risk assessments among institutional investors in the face of technological developments.

Why Did This Happen?

Quantum computing has long been considered a distant threat to Bitcoin's security. However, recent developments suggest that the timeline for quantum computing to pose a serious risk may be shorter than previously assumed. Wood pointed to research indicating that between 20% and 50% of circulating Bitcoin could become vulnerable to quantum attacks.

Such vulnerabilities could compromise the cryptographic protections that underpin Bitcoin's network. This raises concerns about the long-term viability of Bitcoin as a secure, decentralized asset. For investors like Wood, this represents a fundamental shift in risk assessment.

How Did Markets React?

Bitcoin prices have been volatile in response to these developments. As of January 16, 2026, Bitcoin was trading below $96,000, reflecting broader market pressure. The pullback came after the Senate Banking Committee canceled a planned crypto market structure markup and Coinbase withdrew its support.

Meanwhile, gold prices have reached record highs, with XAU/USD trading near $4,615. Gold's performance has been supported by geopolitical uncertainty and concerns over the Federal Reserve's independence, as highlighted by a criminal investigation into Chair Jerome Powell.

What Are Analysts Watching Next?

Analysts are closely monitoring how institutional investors respond to quantum computing risks. While some argue that the threat is overstated, others, like Wood, are taking a precautionary approach. The debate underscores the importance of balancing technological risks against potential rewards in long-term investment strategies.

The Fed's independence and its ability to manage monetary policy without political interference remain key concerns. Citi Research analysts expressed confidence that the Fed's structure insulates it from undue influence. However, the ongoing investigation into Powell has raised questions about the central bank's future direction.

Looking ahead, investors are watching for further developments in quantum computing, as well as the response from the Bitcoin community. Developers have been slow to adopt post-quantum cryptographic solutions, which could leave the network vulnerable if advancements continue at the current pace.

Institutional investors are also evaluating the broader implications of this shift. For long-term portfolios, the focus is on assets that can withstand technological and geopolitical uncertainties. Gold, with its historical resilience, continues to be a preferred option in an environment of rising uncertainty.