Jefferies’ global head of equity strategy has removed Bitcoin from his model portfolio, citing the potential threat of quantum computing.
Why a market strategist reduced his BTC exposure by 10%
Christopher Wood, global head of equity strategy at Jefferies, has removed a 10% allocation to Bitcoin, the world’s largest cryptocurrency by market capitalization, from his model portfolio. In the latest ‘Greed & Fear’ newsletter release, market strategists highlighted the rise of quantum computing as the reason behind this move.
Wood highlighted concerns that advances in quantum computing could threaten Bitcoin’s status and reputation as a trusted store of value, especially in the long term. As the expert noted in his newsletter, the market is currently filled with fears that quantum computing may be just a few years away.
This growing concern borders on the hypothesis that quantum computers have the ability to break through the cryptography of the Bitcoin network. It is believed that these computers could allow an attacker to reverse engineer the private key from the public key and tamper with the integrity of blockchain transactions.
An early institutional supporter of BTC, Wood initially added the premium cryptocurrency to his model portfolio in December 2020 following the COVID-19 pandemic. Jefferies’ head of global equity strategy has increased this Bitcoin allocation to 10% by 2021.
However, the market expert now appears to be viewing the flagship cryptocurrency with some skepticism, believing that quantum threats are potentially present and could undermine cryptocurrencies’ status as a store of value and a “digital alternative to gold.” Wood therefore refocused the model portfolio on older assets, splitting the 10% BTC allocation evenly between physical gold and gold mining stocks.
Although there is no firm timeline for when quantum computers will hit the market, Wood is not the only one to express concern about quantum threats these days. Over the past week, Charles Edwards, founder of Capriol Investments, discussed How quantum threats have cut Bitcoin off from global liquidity.
Edwards writes of X:
The time frame until the probability of a quantum machine breaking Bitcoin’s encryption becomes non-zero is now shorter than the estimated time it would take for a Bitcoin upgrade. Funds have been repositioned according to this risk.
Bitcoin price overview
As of this writing, the price of BTC is around $95,370, reflecting a 0.3% decline over the past 24 hours.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured images from iStock, charts from TradingView
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