Wall Street expert removes Bitcoin leaves
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Crypto News of the Day: Why One of Wall Street's Biggest Bitcoin Bulls Walked
A quiet but consequential shift is occurring in institutional crypto thinking. Christopher Wood, head of global equity strategy at Jefferies and one of Wall Street's most closely watched market strategists, has removed bitcoin entirely from his core model portfolio.
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The Jefferies executive did not mention price volatility but instead cited doubts about the asset's long-term sustainability.
Wood cut a 10% bitcoin allocation from the Jefferies model portfolio and moved it into physical gold and gold mining stocks.
The decision was made in the latest issue of his Greed and Fear newsletter, where Wood pointed out the long-term threat posed by advances in quantum computing to Bitcoin's security and store-of-value thesis.
“The once distant threat of quantum computing has prompted one of the most closely watched market strategies to move away from bitcoin,” Bloomberg quoted Wood as saying in the paper, noting how theoretical risk is now creeping into core portfolio construction.
Wood was an early institutional supporter of Bitcoin, first adding the asset to his model portfolio in December 2020 amid fears of pandemic-era stimulus and currency collapse.
It later increased its exposure to 10% in 2021. Specifically, Bitcoin has risen approximately 325% since its initial placement, compared to gold's 145% gain. However, Wood says performance is no longer the point.
In his view, quantum computing undermines the argument that bitcoin works as a reliable multi-decade store of value, especially for retirement-style, long-term investors.
“There is growing concern in the Bitcoin community that quantum computing may be only a decade or so away,” Wood wrote.
In fact, Bitcoin's security rests on encryption systems where private keys cannot be obtained from the public for today's computers.
However, mysteriously correlated quantum computers (CRQCs) may break that analogy. This allows attackers to reengineer private keys within hours or days.
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Quantum Risk, Governance and the Institutional Rethinking of Bitcoin
The debate exposes the wide gap between capital distributors and developers. Nick Carter, a partner at Castle Island Ventures, captured this tension in a December post.
However, the root cause of the issue is a management issue. Proposed solutions, including burning quantum-vulnerable coins or transitioning to post-quantum cryptography, raise uncomfortable questions about property rights and changes in the law.
Jeffries said that while Bitcoin has undergone forks in the past, confiscating or rejecting coins can undermine the principles that give the network credibility.
Jeffries also pointed out that a large portion of Bitcoin's supply may be quantum-vulnerable. These include:
Addresses of lost coins of the Satoshi era stored in Pay-to-Public-key (P2PK), and addresses are reused by multiple transactions sponsored
In total, this could be millions of BTC.
A recent analysis echoed some of the concerns from Coinbase. According to Coinbase's head of investment research, David Dung, quantum computing poses long-term risks beyond private key security, which could undermine Bitcoin's economic and security models.
Emphasizing that current quantum technology is far from breaking Bitcoin today, Duong warned that around 6.5 million BTC could be vulnerable to long-range quantum attacks. This makes the migration to post-quantum cryptography necessary, even if it is still years away.
Meanwhile, Wood says the long-term questions posed by quantum computing are a long-term positive for gold. This position is a hedge against the volatility of technology and management over the history of gold.
The move reflects a broader shift in institutional thinking. Justin Bones, founder and CIO of Cyber Capital, said Bitcoin could collapse anytime after 2033. But Bones cites reduced post-mining subsidies and lower transaction fees.
According to Justin Bones, 51% of attacks can be profitable at a daily cost of less than $3 million, which can cost twice as much for billions of exchanges. All these concerns border on Bitcoin security.
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