Key Takeaways
- Jefferies has entirely removed its 10% Bitcoin allocation from its pension portfolio.
- Bitcoin delivered 325% returns since Jefferies added it in December 2020.
- The firm views gold as a safer, proven store of value in this environment.
Jefferies Financial Group has removed its entire 10% Bitcoin (BTC) allocation from its long-only U.S. dollar pension portfolio.
The global investment bank disclosed the decision in the latest edition of its widely followed Greed & Fear weekly investment report, written by Christopher Wood, the firm’s global head of equity strategy.
Quantum Computing Fears Prompt Jefferies To Drop Bitcoin
Jefferies removed Bitcoin from its pension portfolio largely because of concerns that long-term advances in quantum computing could undermine Bitcoin’s security model.
In its Greed & Fear report, the firm pointed to the emergence of so-called “cryptographically relevant quantum computers” (CRQCs), which could eventually undermine the cryptographic foundations that secure blockchain networks.
Under current conditions, cracking a Bitcoin private key using conventional supercomputers would take trillions of years.
However, Jefferies noted that a sufficiently powerful quantum computer could theoretically reduce that timeline to hours or days.
The risk stems from Bitcoin’s reliance on public-key cryptography, specifically the Elliptic Curve Digital Signature Algorithm (ECDSA).
Quantum algorithms such as Shor’s algorithm could, in theory, derive private keys from public keys, potentially exposing funds to theft.
Jefferies estimates that between 20% and 50% of all Bitcoin in circulation—roughly 4 million to 10 million BTC—could be vulnerable if quantum computing reaches that level of capability.
That said, the firm emphasized that it does not expect an immediate threat or a near-term collapse in Bitcoin’s price.
Instead, it views quantum risk as a long-term structural challenge to Bitcoin’s role as a hedge against fiat currencies and a store of value in an era of tightening monetary conditions.
Jefferies first added Bitcoin to its pension portfolio in December 2020, during a surge in institutional interest in digital assets.
At the time, the allocation was based on Bitcoin’s appeal as a form of “digital gold,” offering scarcity and potential protection against inflation.
Despite exiting the position, the investment proved highly profitable. Jefferies reported a return of approximately 325% over the holding period.
Gold Wins?
Jefferies has reallocated its former Bitcoin exposure entirely into gold-related assets.
The proceeds from the sale were split evenly:
- 5% to physical gold bullion.
- 5% to gold-mining stocks.
The firm described physical gold as a time-tested store of value with a long record of resilience during periods of economic stress, particularly in the face of technological uncertainty.
Gold-mining stocks, meanwhile, offer leveraged exposure to rising gold prices while providing diversification within the precious metals sector.
This shift reflects Jefferies’ broader view that gold remains a more reliable hedge than digital assets when long-term technological risks are taken into account.
While the report also referenced silver in its discussion of precious metals, the reallocation focused squarely on gold and gold miners.
Gold has served as a safe-haven asset for governments and financial institutions for centuries.
In recent years, however, Bitcoin has increasingly positioned itself as a digital alternative to gold, with public companies such as Strategy and Tesla adding BTC to their balance sheets.
Despite Bitcoin’s strong long-term performance, critics continue to point to its volatility and emerging technological risks.
At the same time, many developers and computing experts argue that quantum computing threats remain theoretical and unlikely to pose a near-term risk to Bitcoin’s security.
Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
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