Christopher Wood, global head of equity strategy at Jefferies, has made a significant shift in his flagship Greed & Fear model portfolio by eliminating Bitcoin entirely. This decision stems from concerns that advancements in quantum computing could threaten the very basis of the cryptocurrency’s cryptographic security.
In the latest update of the widely observed newsletter, Wood confirmed that Jefferies has removed Bitcoin’s 10% allocation from the portfolio, redistributing those funds into a split of 5% into physical gold and 5% into gold-mining equities, as reported by Bloomberg. This strategic move highlights growing uncertainty regarding Bitcoin’s potential to sustain its status as a long-term store of value amidst rapid technological advancements.
Wood stated, “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.”
Notably, Wood has been an early institutional advocate for Bitcoin, initially including it in the model portfolio in December 2020, driven by the economic context of pandemic-era stimulus and fears surrounding fiat currency debasement. He later increased the Bitcoin allocation to 10% in 2021. Over this period, Bitcoin’s value has surged approximately 325%, contrasting with a 145% rise in gold.
However, Wood now posits that the emergence of quantum computing introduces serious structural risks to Bitcoin’s future. The cryptocurrency’s security relies heavily on cryptographic algorithms designed to be unbreakable by classical computers. Yet, quantum computers, upon reaching sufficient power, could hypothetically extract private keys from public keys, leading to unauthorized transfers and eroding trust in the Bitcoin network.
Estimates from security researchers suggest that between 20% and 50% of Bitcoin’s total supply—approximately 4 million to 10 million BTC—could be vulnerable under certain conditions. Furthermore, Coinbase researchers have pinpointed around 6.5 million BTC stored in older wallet formats, which could be particularly susceptible to long-range quantum attacks.
This concern has fostered an ongoing debate within the Bitcoin community, with opinions diverging over the seriousness of the threat. Some feel that developers may be underestimating the risks, whereas others, like Blockstream CEO Adam Back, argue that the threat remains distant and advocate for more discreet preparations toward quantum-resistant solutions rather than panic within the investor community.
The discussion around quantum computing is also catching the attention of mainstream financial entities. Notably, BlackRock has flagged it as a long-term risk in its spot Bitcoin ETF disclosures, while Solana co-founder Anatoly Yakovenko recently suggested a 50% likelihood for a significant quantum breakthrough within the next five years.
In light of this uncertainty, Wood has emphasized gold as a more stable alternative. He characterized the metal as a historically reliable hedge against a backdrop of increasing geopolitical and technological volatility, asserting that the questions raised by quantum computing are “only positive for gold.”
Illustrating this trend, gold prices hit a record high this month, surpassing $4,600 per ounce as investors flocked to this safe-haven asset amid intensifying geopolitical tensions, particularly involving Iran. Additionally, there are rising expectations that the Federal Reserve may implement interest rate cuts following softer economic data related to inflation and the labor market.
