Jefferies Cuts 10% Bitcoin Allocation Amid Quantum Computing Fears

Jefferies' Christopher Wood removed a 10% Bitcoin allocation from its pension portfolio. The decision was driven by concerns over the long-term threat posed by quantum computing to Bitcoin's security. Wood cited estimates that up to 50% of the circulating Bitcoin supply could be vulnerable to quantum attacks according to analysis. The reallocation was evenly split into physical gold bullion and gold-mining stocks. This shift reflects a strategic move to prioritize time-tested assets amid growing technological uncertainties. Jefferies emphasized that gold remains a more reliable store of value compared to digital assets in the context of quantum computing risks. Wood's decision aligns with a broader industry debate on the vulnerability of public-key cryptography.

Quantum algorithms such as Shor's could theoretically compromise the Elliptic Curve Digital Signature Algorithm (ECDSA) used by Bitcoin. The firm noted that while the threat is not immediate, the long-term implications for Bitcoin's store-of-value thesis are significant.

Why Did This Happen?

The shift comes amid increasing awareness of quantum computing capabilities. Microsoft's Majorana 1 quantum chip in February 2025 marked a breakthrough in quantum computing. This development brought forward the possibility of 'Q-Day,' when current encryption standards could become obsolete according to analysis. Jefferies cited a May 2025 study by Chaincode Labs to justify its move. The study estimated that 4–10 million BTC, or 20–50% of the circulating supply, could be at risk from quantum-enabled key extraction according to the study. The threat is particularly acute for exchange and institutional wallets due to address reuse. This has led to a growing call for quantum-resistant cryptographic solutions within the blockchain industry according to industry analysis.

How Did Markets React?

The move by Jefferies reflects a broader industry trend toward caution. Projects like Project Eleven have raised capital to develop tools for securing crypto networks against quantum threats. The $20 million Series A round at a $120 million valuation highlights the urgency of this issue according to reports. Institutional players are also taking steps to mitigate quantum risks. El Salvador, for instance, split its Bitcoin reserves across 14 addresses to enhance security. This approach is seen as a proactive measure against potential quantum threats according to industry sources.

What Are Analysts Watching Next?

Rosenblatt Securities remains bullish on quantum computing companies. The firm initiated coverage on Rigetti Computing and Quantum Computing with Buy ratings. Analysts highlighted Rigetti's modular approach to scaling qubits and its internal fabrication capabilities according to market analysis. Quantum Computing Inc. (QCi) is also seen as a diversified play with significant cash reserves and strategic acquisitions. The firm's thin-film lithium niobate (TFLN) fabrication strategy is viewed as a key differentiator according to industry reports.

The launch of the Bitcoin Quantum testnet by BTQ Technologies marks a significant step in preparing for quantum threats. The testnet provides a live environment for testing quantum-resistant solutions. Delphi Digital validated this approach, positioning Bitcoin Quantum as a critical proving ground for the industry's quantum transition according to company announcements.

Investors are advised to monitor the progress of quantum computing and its impact on digital assets. The financial sector is increasingly recognizing the need for post-quantum cryptography. As quantum capabilities mature, the urgency to adopt quantum-resistant protocols will intensify according to financial analysis. Jefferies' move signals a shift in institutional thinking, emphasizing long-term security over short-term gains in the digital asset space according to industry reports.

The decision by Jefferies underscores the evolving landscape of digital asset investment. While Bitcoin has demonstrated strong returns, the emergence of quantum computing threats is prompting a reevaluation of its role in institutional portfolios. The move to gold-related assets reflects a preference for proven, stable stores of value in an era of technological uncertainty according to market analysis.

The market response to Jefferies' decision has been mixed. While some analysts view it as a prudent move, others argue that quantum computing risks remain theoretical and distant. The debate highlights the need for a balanced approach to managing digital asset exposure in light of emerging technological threats according to industry analysis.

The broader implications for the financial sector are significant. As quantum computing advances, the need for robust, quantum-resistant cryptographic solutions will become more pressing. Financial institutions are beginning to allocate resources to quantum-resistant projects, but many have yet to take meaningful action according to industry reports. The urgency to adopt post-quantum cryptography is growing, driven by the potential for large-scale data breaches and financial losses according to risk assessments.

The future of digital asset investment will likely be shaped by the pace of quantum computing development. While the threat is not imminent, the long-term risks are substantial. Investors and institutions must stay informed and prepared as the industry navigates this new frontier according to industry analysis.