Bitcoin deemed too vulnerable: Jefferies bets on gold against quantum threat

The Changing Landscape of Institutional Investment in Bitcoin

Bitcoin has experienced a notable shift in its appeal on Wall Street, moving away from its previous status as a symbol of financial modernity. Major fund managers appear to be less captivated by the cryptocurrency, with institutional investors seemingly gravitating back towards more tangible assets. This development raises questions about whether this represents a temporary lull in the relationship between traditional finance and blockchain technology, or the beginning of a more significant divergence. At Jefferies, a palpable sense of mistrust has taken hold regarding Bitcoin's long-term viability.

Jefferies' Strategic Shift: From Bitcoin to Gold and Mining Stocks

The cryptocurrency market is showing signs of stabilization after enduring several months of uncertainty, yet overall confidence remains precarious. Christopher Wood, the global strategist at Jefferies, has made a decision that has garnered significant attention: he has divested 10% of Bitcoin from his model portfolio. These funds have been reallocated to physical gold and mining stocks, in equal measure. This move is particularly symbolic, given Wood's prior endorsement of Bitcoin as a digital alternative to gold. His current reasoning centers on concerns that the cryptographic security underpinning the Bitcoin network could be compromised by advancements in quantum computing.

In his publication, the Greed & Fear letter, Wood articulated a threat that extends beyond mere price fluctuations, emphasizing the potential erosion of Bitcoin's status as a "store of value" among institutional investors.

There is an ongoing debate about whether to “burn” coins vulnerable to quantum or to do nothing and risk those coins being “stolen” by entities equipped with what are called CRQC (cryptographically relevant quantum computers). The problem seems to be that deriving a public key from a private key is a simple computational operation, whereas the inverse would take supercomputers thousands of trillions of years.

Christopher Wood

For Wood, this risk is no longer a hypothetical concern. In an era of rapidly expanding computational power, gold is re-emerging as a stable anchor. This represents a return to tangible assets in the face of digital asset volatility.

The Quantum Computing Threat: An Existential Challenge for the Crypto Sphere

The discussion surrounding the "quantum threat" to cryptography is not a new phenomenon, but it is currently escalating with unprecedented intensity. In February 2025, Microsoft unveiled the Majorana 1 chip, a quantum computing prototype anticipated to accelerate the arrival of "Q-Day"—the day when current cryptographic standards become vulnerable. Since this announcement, the cryptocurrency community has been closely monitoring these developments.

A study conducted by Chaincode Labs estimates that between 4 million and 10 million Bitcoin could be vulnerable to a quantum attack, representing up to 50% of the total supply. David Duong, head of research at Coinbase, has indicated that nearly one-third of all Bitcoin in circulation, including holdings from the early Satoshi era, would remain exposed to this risk.

Despite these projections, developers maintain a degree of calm. Adam Back, CEO of Blockstream, has previously stated that breaking current signature schemes would still require an estimated 20 to 40 years.

The divergence between institutional caution and technical confidence within the crypto space is widening. Traditional finance seeks to anticipate future risks, while the crypto community often places its faith in long-term technological resilience.

Crypto Market Repositioning: Gold's Resurgence as an Absolute Refuge

Some market analysts interpret Jefferies' decision not as a repudiation of Bitcoin, but rather as an adaptation to the prevailing market conditions. Crypto investors are currently observing a reallocation of portfolios towards assets perceived as more stable. Even El Salvador, a nation that has adopted Bitcoin as legal tender, has taken steps to mitigate exposure risks by fragmenting its Bitcoin reserves across 14 distinct addresses.

The industry is actively responding to these challenges. Project Eleven has successfully raised $20 million to fund the development of post-quantum cybersecurity tools. Within the crypto community, discussions are ongoing, with developer Jameson Lopp sharing his perspective on X (formerly Twitter) last December:

No, quantum computers will not break Bitcoin anytime soon

Nonetheless, the market signals are clear: a search for a new narrative is underway. Gold is reclaiming its historical role as a safe-haven asset, while Bitcoin endeavors to maintain its legitimacy in an evolving technological landscape where even quantum computing is becoming a factor.

Experts at Grayscale also suggest that the quantum threat remains a distant concern. They posit that the blockchain has ample time and possesses the necessary tools to adapt to future cryptographic challenges. Indeed, post-quantum solutions, such as those being advanced by Naoris, are progressing rapidly, aiming to prepare for a future where cryptography will necessitate fundamental reinvention.