The threat posed by quantum computing to Bitcoin is rapidly transitioning from theoretical speculation to a tangible reality. A Coinbase chief researcher has issued a stark warning, indicating that approximately one-third of the Bitcoin supply is vulnerable to quantum risk. Concurrently, Jefferies' Global Head of Equity Strategy has completely removed Bitcoin from his investment portfolio, reallocating the funds to gold. This significant shift is actively reshaping institutional investor sentiment towards the leading cryptocurrency.
According to recent media reports, David Duong, Global Head of Investment Research at Coinbase, has cautioned that roughly 32.7% of the total Bitcoin supply, equating to about 6.51 million coins, faces potential risk from quantum computing attacks. In an analytical column dated January 16th, Christopher Wood, the strategy chief at Jefferies, announced the liquidation of the entire 10% Bitcoin allocation within his portfolio model. These funds were redirected into a 5% allocation to physical gold and a 5% stake in gold mining stocks. He justified this decisive move by explaining that breakthroughs in quantum computing, which could materialize within a few years rather than decades, fundamentally undermine Bitcoin's premise as a "reliable store of value." Quantum computers, leveraging the principles of advanced physics, possess processing speeds that dwarf those of traditional computers, potentially enabling them to crack the cryptographic algorithms that secure Bitcoin wallets. Data from cryptocurrency security research firm Project 11 reveals that nearly 70% of vulnerable Bitcoin stems from address reuse, a practice that exposes security information which could be exploited by quantum computers. The market has already begun pricing in these concerns. Year-to-date, Bitcoin has declined by 6.5% relative to gold, which itself has surged 55% over the same period. The Bitcoin-to-gold ratio dropped to 19.26 in January 2026, signaling that investors are reassessing Bitcoin's status as "digital gold." Recently, Bitcoin experienced a sharp pullback near its 100-day moving average, with the $85,000 level emerging as a critical price point requiring close observation.
The escalating urgency of this threat is creating a profound governance dilemma within the Bitcoin community: should quantum-vulnerable coins be intentionally destroyed to safeguard the system's integrity, or should the network take no action and risk a catastrophic theft? This difficult choice pits protocol security directly against the protection of property rights. Analyses from Jefferies suggest that the quantum risk is no longer a theoretical problem. A growing consensus of concern indicates that quantum computers with cryptography-breaking capabilities could arrive within years, not decades, posing an existential threat to Bitcoin's security model and its "digital gold" narrative. Current estimates indicate that a staggering 20% to 50% of the entire Bitcoin supply could be in a vulnerable state. Due primarily to address reuse, approximately 4 million to 10 million Bitcoins are considered at risk, with exchange and institutional wallets being the most susceptible targets. A 2025 study by Chaincode Labs estimated that around 6.26 million Bitcoins, with a value between $650 billion and $750 billion, could be exposed to future quantum attacks. In a LinkedIn analysis published on January 5th, David Duong highlighted that upgrading Bitcoin's security is the core challenge. He identified two primary threats: quantum computers cracking the Elliptic Curve Digital Signature Algorithm (ECDSA) keys, and attacks targeting the SHA-256 algorithm that underpins Bitcoin's proof-of-work system. Vulnerable addresses include those using traditional Pay-to-Public-Key scripts, certain types of multisignature wallets, and exposed Taproot configurations. Institutional investors are leading the exodus. Christopher Wood stated in his January 16th analysis column that advancements in quantum computing undermine the logic of Bitcoin as a "reliable store of value," particularly for long-term investors like pension funds. He liquidated the 10% Bitcoin allocation in his portfolio model, reallocating the proceeds to 5% physical gold and 5% gold mining stocks. Wood, an early institutional proponent of Bitcoin, first added it to his portfolio in December 2020 during the pandemic-era stimulus measures and increased the allocation to 10% in 2021. He explained that his decision to exit was driven by concerns that the advent of quantum computing could destabilize Bitcoin's foundational security, with the technology potentially achieving critical breakthroughs within a few years. Theoretically, quantum computers could break Bitcoin's encryption, reverse-engineering the private keys used to authorize transactions. Wood argued that this would destroy Bitcoin's concept as a store of value, thereby negating its role as a digital alternative to gold.
Technical breakthroughs are accelerating, suggesting the threat may arrive sooner than anticipated. Current-generation quantum computers operate with roughly 105 qubits of computational power. According to research in AVS Quantum Science, a 2022 study by Universal Quantum and the University of Sussex estimated that breaking a Bitcoin private key would require a machine with 13 million qubits. However, opinions within the industry on the urgency are sharply divided. Adam Back, CEO of Blockstream, believes the threat is likely 20 to 40 years away. Conversely, Michael Saylor, Chairman of Strategy, contends that quantum computing will ultimately strengthen Bitcoin, as he expects the network to upgrade and fortify its defenses accordingly. Pierre-Luc Dallaire-Demers, a quantum computing researcher at the University of Calgary, offers a more aggressive estimate, suggesting the threat could become reality in as little as five years. Jameson Lopp, co-founder of Casa, indicated that preparing Bitcoin with quantum-resistant capabilities could take five to ten years. Bitcoin developers have already proposed an upgrade to incorporate quantum-resistant security features. This proposal remains in the draft stage and is undergoing testing. Other blockchain networks are also preparing for the quantum threat through privacy-focused upgrades.
Bitcoin is confronted with a profound governance dilemma. The community is embroiled in a debate over whether to proactively destroy coins identified as quantum-vulnerable to protect the system's integrity, or to take no action and risk the possibility of them being stolen. This choice creates a direct conflict between protocol security and the protection of property rights. If vulnerable tokens were to be destroyed, the effective supply of Bitcoin would decrease, which could theoretically provide price support. However, this would necessitate an extremely contentious and precedent-setting decision process, akin to a hard fork. Unlike traditional banks, which could mandate quantum-safe upgrades through central authority, Bitcoin must coordinate any changes across its distributed network. There is no risk committee, no mandatory regulations, and no single entity capable of enforcing immediate action. Charles Hoskinson, founder of Cardano, has warned that prematurely adopting post-quantum cryptography could severely degrade efficiency. The US Defense Advanced Research Projects Agency's quantum blockchain initiative suggests a meaningful threat might emerge in the 2030s. Yet, rapid progress indicates this timeline could accelerate, especially if AI integration compresses the quantum development cycle.
Institutional attitudes are diverging, with caution coexisting alongside optimism. Despite Wood's reduced exposure, institutional support has not vanished entirely. Reports indicate that Harvard University increased its Bitcoin allocation by nearly 240%. Morgan Stanley has begun advising its wealth management clients to allocate up to 4% of their portfolios to digital assets. Similarly, Bank of America permits allocations of 1% to 4%. This suggests support has not disappeared but has instead become more fragmented, based on differing risk assessments.
Duong reiterated the two primary threats: quantum computers cracking ECDSA keys, and attacks on the SHA-256 algorithm that supports Bitcoin's proof-of-work system. Vulnerable addresses include traditional Pay-to-Public-Key scripts, certain multisignature wallets, and exposed Taproot configurations. Proactive measures—specifically, avoiding address reuse and transferring coins to quantum-resistant addresses—are considered crucial mitigation strategies. However, until Bitcoin's decentralized system can successfully coordinate a quantum-resistant upgrade, the threat remains very real. A user on platform X, batsoupyum, encapsulated the sentiment: "After reading this kind of research, financial advisors will keep client allocations low or at zero because quantum computing is an existential threat. Until this is resolved, it will be a millstone around Bitcoin's neck." The quantum computing issue has moved from theoretical discussion to having tangible impacts on portfolio decisions. Bitcoin's recent underperformance reflects not just market cycles but also the gradual weighting of an existential risk. This is shaping how institutions allocate capital and is forcing the network to confront an unprecedented technological challenge.
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