Jefferies’ head of global equity strategy has removed Bitcoin from his model portfolio, citing potential threats from quantum computing.
Why Market Strategists Are Reducing BTC Exposure by 10%
Christopher Wood, head of global equity strategy at Jefferies, reduced the allocation to Bitcoin, the world’s largest cryptocurrency by market capitalization, by 10% in his model portfolio. In a recent “Greed & Fear” newsletter, the market strategist highlighted the rise of quantum computing as the reason for this move.
Wood highlighted fears that advances in quantum computing could threaten Bitcoin’s position and reputation as a trusted store of value, especially in the long term. As the expert says in his newsletter, the market is currently filled with fears that quantum computing may be just a few years away.
These growing concerns border on the hypothesis that quantum computers have the ability to breach the Bitcoin network’s encryption technology. These computers are known to allow attackers to compromise the integrity of blockchain transactions by reverse engineering the private keys of the public keys.
Wood, who was an early institutional supporter of BTC, initially added the top cryptocurrency to his model portfolio in December 2020 following the COVID-19 pandemic. By 2021, Jefferies’ head of global equity strategy has expanded its Bitcoin allocation to 10%.
However, market experts now appear to be viewing the flagship cryptocurrency with some skepticism as they believe the threat from Quantum is potentially existential, undermining its status as a store of value and a “digital alternative to gold.” Wood therefore refocused his model portfolio on older assets, splitting his 10% BTC allocation equally between physical gold and gold mining stocks.
There’s no clear timeline for when quantum computers will hit the market, but Wood isn’t the only one to have recently expressed concern about quantum threats. Last week, Charles Edwards, founder of Capriole Investments, also discussed How quantum threats decoupled Bitcoin from global liquidity.
Edwards wrote to X:
The non-zero probability that a quantum machine will break Bitcoin’s encryption is now less than the expected time it would take to upgrade Bitcoin. Money is therefore being reallocated to account for these risks.
Bitcoin price at a glance
As of this writing, the BTC price is around $95,370, down 0.3% over the past 24 hours.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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