Christopher Wood, global head of equity strategy at Jefferies, has eliminated Bitcoin from his flagship Greed & Fear model portfolio, citing concerns that developments in quantum computing could pose an existential threat to the cryptocurrency’s cryptographic foundation.
In the latest edition of the widely followed newsletter, Wood confirmed that Jefferies has removed its entire 10% Bitcoin allocation, replacing it with a split allocation of 5% to physical gold and 5% to gold mining stocks, according to Bloomberg.
The strategist said the move reflects growing uncertainty about whether Bitcoin can maintain its role as a long-term store of value in the face of accelerating technological change.
“While Greed & Fear doesn’t think the quant issue is about to dramatically impact the Bitcoin price in the near term, the ‘store-of-value’ concept is clearly on less solid footing from a long-term retirement portfolio perspective,” Wood wrote.
Wood was an early institutional supporter of Bitcoin, only adding it to the model portfolio in December 2020 amid pandemic stimulus and fears of fiat currency depreciation. He later increased the grant to 10% in 2021.
Since its initial listing, Bitcoin has risen approximately 325% compared to a 145% increase in gold over the same period.
Quantum computing poses structural risks to Bitcoin
Despite the strong performance, Wood argues that quantum computing poses 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 can theoretically derive private keys from public keys, enabling unauthorized transfers and undermining trust in the network.
Security researchers estimate that around 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 in older wallet formats where public keys are already exposed on-chain, making them susceptible to so-called long-range quantum attacks.
The issue has sparked a growing rift in the Bitcoin ecosystem. Some believe that developers underestimate the risk. Others, including Blockstream CEO Adam Back, argue that the threat remains remote and that quiet preparatory work towards quantum-resistant signatures is preferable to alarming investors.
The debate has also begun to reach mainstream funding. BlackRock has listed quantum computing as a potential long-term risk in its spot Bitcoin ETF disclosures, while Solana co-founder Anatoly Yakovenko recently suggested there is a 50% chance of a meaningful quantum breakthrough within five years.
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 an ounce, as investors flocked to the safe haven 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.