The threat of quantum computing to Bitcoin is moving from theory to reality. A Coinbase researcher has issued a warning that about 33% of the Bitcoin supply faces quantum risk, while Jefferies' Global Head of Equity Strategy has completely removed Bitcoin from his portfolio, shifting allocation to gold. This change is reshaping institutional investors' attitudes towards Bitcoin.
According to the latest media reports, David Duong, Head of Global Investment Research at Coinbase, warned that approximately 32.7% of the Bitcoin supply, involving about 6.51 million Bitcoins, faces potential quantum computing attack risks.
Jefferies strategist Christopher Wood also announced in an analysis column on January 16th that he was liquidating the entire 10% Bitcoin position in his portfolio model, reallocating to 5% physical gold and 5% gold mining stocks. He explained that the emergence of quantum computing could achieve breakthroughs in the coming years rather than decades, which would shake the foundation of Bitcoin as a 'reliable store of value'.
Quantum computers utilize advanced physics principles, and their computing speed far exceeds that of traditional computers, potentially ultimately cracking the encryption algorithms that protect Bitcoin wallets. According to data from cryptocurrency security research institution Project 11, nearly 70% of vulnerable Bitcoin comes from address reuse, which exposes security information that could be exploited by quantum computers.
The market has begun to reflect this concern. Bitcoin has fallen 6.5% relative to gold this year, while gold has risen 55% over the same period. The Bitcoin-to-gold ratio fell to 19.26 in January 2026, showing that investors are reassessing Bitcoin's 'digital gold' status. Bitcoin recently encountered a strong pullback near the 100-day moving average, with $85,000 being a key level to watch closely.
The urgency of this threat is triggering a governance dilemma within the Bitcoin community: whether to destroy quantum-vulnerable coins to protect system integrity, or to take no action and risk them being stolen. This choice pits protocol security against property rights protection.
20-50% of Bitcoin Supply at Risk
According to Jefferies analysis, the quantum risk is no longer a theoretical issue. Growing concerns show that quantum computers with cryptography-related capabilities could arrive within years rather than decades, posing an existential threat to Bitcoin's security model and its 'digital gold' narrative.
Estimates show that 20-50% of Bitcoin may be in a vulnerable state. Due to address reuse, approximately 4 million to 10 million Bitcoins are at risk, with exchange and institutional wallets being the most vulnerable targets. Chaincode Labs' 2025 research estimated that about 6.26 million Bitcoins, worth between $650 billion and $750 billion, could be exposed to future quantum attacks.
David Duong pointed out in a LinkedIn analysis on January 5th that upgrading Bitcoin's security is a core challenge. He highlighted two main threats: quantum computers cracking Elliptic Curve Digital Signature Algorithm (ECDSA) keys, and targeting the SHA-256 algorithm that underpins Bitcoin's proof-of-work system. Vulnerable addresses include traditional Pay-to-Public-Key scripts, certain multi-signature wallets, and exposed Taproot setups.
Institutional Investors Lead the Exodus
Christopher Wood stated in his January 16th analysis column that advances in the field of quantum computing would weaken the logic of Bitcoin as a 'reliable store of value', especially for long-term investors like pension funds. He liquidated the entire 10% Bitcoin position in his portfolio model, reallocating to 5% physical gold and 5% gold mining stocks.
Wood was an early institutional supporter of Bitcoin, adding it to his portfolio in December 2020 during the pandemic when countries released massive stimulus measures, and increased his holding to 10% in 2021. He explained that the reason for selling was concern that the advent of quantum computing would shake Bitcoin's foundation, with the technology potentially achieving breakthroughs in the coming years rather than decades.
Quantum computers could theoretically crack Bitcoin's encryption algorithms, reverse-engineering the private keys used to authorize transfers. Wood stated this would destroy the concept of Bitcoin as a store of value, thereby undermining its status as a digital alternative to gold.
Current quantum computers operate with computing power of about 105 qubits. According to research in AVS Quantum Science, a 2022 study by Universal Quantum and the University of Sussex estimated that cracking a Bitcoin private key would require 13 million qubits.
However, industry insiders are divided on the urgency. Blockstream CEO Adam Back believes the threat might still be 20 to 40 years away. MicroStrategy Chairman Michael Saylor believes that quantum computing will enhance rather than threaten Bitcoin, arguing the network will upgrade and fortify its defenses.
University of Calgary quantum computing researcher Pierre-Luc Dallaire-Demers provided a more aggressive estimate, believing the threat could become a reality in about five years. Casa co-founder Jameson Lopp stated that preparing Bitcoin for quantum resistance could take five to ten years.
Bitcoin developers have proposed an upgrade proposal to add quantum-resistant security features. The proposal is still in the draft stage and is being tested. Other blockchain networks are also preparing for the quantum threat through privacy upgrades.
Bitcoin faces a governance dilemma. The community is debating whether to destroy quantum-vulnerable tokens to protect system integrity, or do nothing and bear the risk of theft. This choice creates a conflict between protocol security and property rights protection.
If vulnerable tokens were destroyed, Bitcoin's effective supply would decrease, theoretically potentially supporting the price, but only after going through a highly controversial and precedent-setting, fork-like decision process.
Unlike traditional banks, which can enforce quantum security upgrades through central authority, Bitcoin must coordinate changes within a distributed network. There is no risk committee, no mandatory regulations, and no single entity that can enforce immediate action.
Cardano founder Charles Hoskinson warned that premature adoption of post-quantum cryptography could severely reduce efficiency. The US Defense Advanced Research Projects Agency's (DARPA) quantum blockchain initiative believes a meaningful threat could emerge in the 2030s. However, rapid progress suggests the timeline could accelerate, especially if AI integration compresses the quantum development process.
Despite Wood reducing exposure, institutional support has not completely disappeared. Harvard University reportedly increased its Bitcoin allocation by nearly 240%. Morgan Stanley has begun advising its wealth management clients to allocate up to 4% of their portfolio to digital assets. Similarly, Bank of America allows allocations of 1% to 4%. This indicates that support has not vanished but has become more fragmented based on different risk assessments.
Duong pointed out two main threats: quantum computers cracking ECDSA keys, and targeting the SHA-256 algorithm that underpins Bitcoin's proof-of-work system. Vulnerable addresses include traditional Pay-to-Public-Key scripts, certain multi-signature wallets, and exposed Taproot setups.
Address hygiene—avoiding address reuse and moving tokens to quantum-resistant addresses—is considered a key mitigation strategy. However, until Bitcoin's decentralized system can adequately coordinate a quantum-resistant upgrade, the threat remains real.
X platform user batsoupyum wrote: "Financial advisors reading this kind of research will keep client allocations low or zero because quantum computing is an existential threat. Until this issue is resolved, it will be an albatross around Bitcoin's neck."
The quantum computing issue has shifted from theory to having a real impact on portfolios. Bitcoin's underperformance reflects not only market cycles but also the gradual weighting of an existential risk, which is shaping how institutions allocate capital and forcing the network to confront an unprecedented technical challenge.
