Jefferies' Wood drops 10% bitcoin allocation over quantum computing fears

Christopher Wood, global head of equity strategy at investment bank Jefferies, has eliminated the "GREED & fear" model portfolio’s entire bitcoin BTC allocation, citing quantum computing risks.

The 10% stake was divided equally into new 5% allocations for physical gold bullion and gold-mining stocks, according to a Thursday note shared with The Block. Wood cited a theoretical but intensifying debate over quantum computing’s capacity to break Bitcoin’s cryptographic security, which he described as an "existential" threat to its store-of-value thesis.

“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,” Wood wrote.

Wood was among the earlier institutional strategists to incorporate bitcoin into a diversified model portfolio, adding it during the pandemic-era stimulus cycle as a digital alternative to gold once institutional custody infrastructure was in place. The theoretical justification at the time centered on Bitcoin’s fixed supply schedule, with the final BTC expected to be mined around 2140.

That premise now faces scrutiny. Citing a May 2025 study by Chaincode Labs researchers Anthony Milton and Clara Shikhelman, Wood noted estimates that 4 million BTC to 10 million BTC, or 20% to 50% of the circulating supply, could be vulnerable to quantum-enabled key extraction. The report highlighted exchange and institutional wallets as among the most exposed due to address reuse.

Industry scrutiny of quantum computing threat timelines intensifies

The move coincides with accelerating industry focus on quantum readiness. Microsoft's unveiling of its Majorana 1 quantum chip in February 2025 was seen as a breakthrough that potentially brings forward 'Q-Day', when current encryption becomes vulnerable.

In a Jan. 6 post on LinkedIn, Coinbase Global’s head of investment research, David Duong, warned that up to 33% of bitcoin's supply, particularly coins in reused addresses or early 'Satoshi-era' wallets, could be especially at risk from quantum attacks. Duong noted growing institutional awareness, pointing to BlackRock's decision to flag quantum risks in an amended prospectus for its iShares Bitcoin Trust ETF in May 2025.

In response, projects are mobilizing capital. This week, Project Eleven raised a $20 million Series A round at a $120 million valuation, led by Castle Island Ventures, to build tools for securing crypto networks against quantum threats.

Even sovereign holders have taken steps. El Salvador last August split its bitcoin reserves across 14 addresses, citing security enhancements tied to emerging quantum risks.

Beyond Bitcoin, Ethereum co-founder Vitalik Buterin has outlined conditions he argues are necessary for a quantum-safe Ethereum, including century-scale resistance to quantum attacks. Buterin has said quantum resilience is a prerequisite for any protocol seeking to become self-sustaining without continuous intervention from developers.