- Jefferies removed Bitcoin entirely from its “Greed & Fear” model portfolio, citing long-term quantum-computing risk to Bitcoin’s cryptography.
- Its prior 10% Bitcoin allocation was reallocated 5% to physical gold and 5% to gold-mining stocks as more durable stores of value.
- Jefferies points to estimates that 4–10 million BTC (about 20–50% of supply) could be vulnerable due to address reuse and early public-key exposure.
- The shift signals that institutions with multi-decade horizons are beginning to price quantum risk into asset allocation even if near-term impact seems limited.
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Jefferies’ decision to abandon its 10% allocation to Bitcoin and reallocate equally into gold and gold-mining stocks is not a tactical trade, but rather a long-term strategic recalibration. The anchor concern is the potential for cryptographically relevant quantum computers (CRQCs) to undermine Bitcoin’s foundational security assumptions—specifically, the strength of elliptic curve cryptography (ECDSA), used to derive private keys from public keys. If quantum advances reach sufficient scale, older address types and reused wallets could become exposed to compromise, making the store-of-value narrative vulnerable.
This move also reveals more about Jefferies’ target investor profile. Its “GREED & Fear” model serves long-duration, pension‐style institutions for whom even low-probability, high-impact risks carry weight. Though Jefferies states that the risk of near-term price drops is limited, the more serious concern lies in Bitcoin’s viability over decades—which shifts the calculus in favor of assets like gold which have centuries of resilience and no dependence on cryptographic assumptions.
On the data front, the figures Jefferies pulls in from Chaincode Labs—4-10 million BTC potentially exposed—transpose into a 20-50% exposure of circulating supply. That scale suggests systemic risk, not merely isolated vulnerability. Key heterogeneities: early wallets with public key exposure, address reuse, and institutional/exchange holdings are disproportionately exposed.
Strategic implications for the broader investment community are multi-fold. First, risk disclosure practices may see more quantum risk clauses (as BlackRock already added to its Bitcoin Trust prospectus). Second, there may be a push for Bitcoin protocol upgrades toward quantum-resistant signature schemes. Third, this reallocation could trigger further hedging flows into traditional safe havens or ‘hard’ assets. Finally, there is an open question about the timing: how soon quantum threats become practically material is still highly uncertain.
Remaining open questions include: What is the timeline for quantum hardware to reach cryptographically relevant scale? Will Bitcoin developers succeed in transitioning major address types to quantum-safe signatures without network fragmentation or trust erosion? How will institutional investors price quantum risk in valuations? Which assets gain as alternative stores of value—gold, other metals, real estate, or emergent technologies?
Supporting Notes
- Jefferies’ global equity strategist, Christopher Wood, removed a 10% allocation to Bitcoin from its “Greed & Fear” model portfolio, reallocating 5% to physical gold and 5% to gold-mining stocks.
- The bank’s rationale centers on quantum computing risks that could expose parts of Bitcoin’s circulating supply estimated between 20%-50% (roughly 4 to 10 million BTC) due to public key exposure and address reuse.
- Bitcoin has returned approximately 325% since Jefferies first added it to its portfolio in December 2020, compared to gold’s 145% over the same period. Despite strong past returns, Jefferies considers Bitcoin’s long-term store-of-value foundation as “less solid” under quantum threat.
- Jefferies sees no imminent price collapse, but believes for long-horizon investors like pensions, even a theoretically low-probability risk is enough to undercut Bitcoin’s value narrative.
- Jefferies was founded on October 2, 1962, making it roughly 63 years old as of 2025-2026.