Jefferies' Wood Drops Bitcoin on Threat From Quantum Computing

Jefferies' global equity strategist Christopher Wood has removed a 10% Bitcoin allocation from his model portfolio. The decision stems from concerns that quantum computing could undermine Bitcoin's cryptographic security. Wood cited these risks as a reason to shift focus to traditional safe-haven assets.

Wood is reallocating the Bitcoin portion equally to gold and gold-mining stocks. This represents a complete reversal of his earlier bullish stance on Bitcoin. The reallocation is based on long-term security concerns rather than short-term performance metrics.

The catalyst for the change is research from Chaincode Labs. The firm estimates that 20–50% of all circulating bitcoins could be vulnerable to quantum attacks. This assessment has raised doubts about Bitcoin's reliability as a store of value for pension-style, long-term investors.

Why Did This Happen?

Bitcoin's security is based on cryptographic algorithms. These algorithms are currently secure against conventional computing power. However, quantum computers could reverse-engineer private keys from public ones, threatening the system's integrity.

The potential for quantum computers to compromise Bitcoin's security has intensified in recent months. Previously, it was assumed quantum computing would remain theoretical for more than a decade. Now, many experts believe a working quantum computer could arrive in just a few years.

How Did Markets React?

Wood's move has been interpreted as a signal to other institutional investors. Bitcoin has been a major component of long-term investment strategies for some years. This shift suggests growing skepticism about its viability as a store of value.

Gold, in contrast, has a long history as a safe-haven asset. Wood argues that it remains the most stress-tested store of value. He also sees it as a hedge against rising geopolitical risks.

What Are Analysts Watching Next?

Bitcoin developers are already discussing how to respond to quantum threats. Options include burning vulnerable coins or updating the protocol to resist quantum attacks. The industry is still evaluating how best to address these concerns.

Chaincode Labs' research highlights the scale of the risk. The report estimates that between 4 and 10 million BTC could be at risk. This includes coins stored at exchanges and other institutions that reuse addresses, exposing their public keys.

Wood's decision reflects broader institutional concerns about the long-term viability of cryptocurrencies. While Bitcoin has outperformed gold since 2020, security concerns have taken precedence. Institutional investors are now more cautious about digital assets in long-term portfolios.