Is the wolf really here? Quantum computing's threat to Bitcoin is "no longer theoretical," analyst says: 20-50% of Bitcoin faces "security risks."

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The threat of quantum computing to Bitcoin is moving from theory to reality. Coinbase's chief researcher has issued a warning that about 33% of Bitcoin's supply faces quantum risk, while Jefferies' global head of equity strategy has removed Bitcoin entirely from their investment portfolio, shifting to gold. This change is reshaping institutional investors' attitudes toward Bitcoin.

According to the latest media reports, David Duong, Coinbase's Global Head of Investment Research, warned that about 32.7% of Bitcoin’s supply faces potential quantum computing attack risk, involving about 6.51 million Bitcoins.

Jefferies’ head of strategy, Christopher Wood, announced in his January 16 analysis column that he had closed out all 10% of the Bitcoin position in his portfolio model, reallocating 5% to physical gold and 5% to gold mining stocks. He explained that the advent of quantum computing could achieve breakthroughs in a few years rather than over a decade, shaking the foundation of Bitcoin as a “reliable store of value.”

Quantum computers, leveraging advanced physics principles, have computational speeds far surpassing traditional computers and may eventually crack the encryption algorithms protecting Bitcoin wallets. According to crypto security research organization Project 11, nearly 70% of vulnerable Bitcoins come from reused addresses, which exposes security information that quantum computers could exploit.

The market has begun to reflect these concerns. Bitcoin has fallen 6.5% against gold so far this year, while gold has risen 55% over the same period. The Bitcoin-to-gold ratio dropped to 19.26 in January 2026, indicating investors are reassessing Bitcoin’s status as “digital gold.” Recently, Bitcoin encountered a strong pullback near its 100-day moving average, and $85,000 is a key level to watch closely.

The urgency of this threat is creating a governance dilemma within the Bitcoin community: whether to destroy quantum-vulnerable coins to protect system integrity or take no action and risk theft. This choice places protocol security and property protection in opposition.

20-50% of Bitcoin Supply at Risk

According to Jefferies' analysis, quantum risk is no longer just a theoretical issue. Mounting concerns show that quantum computers with cryptographic capabilities could arrive within years, not decades, threatening Bitcoin's security model and its “digital gold” narrative.

Estimates indicate that 20-50% of Bitcoin could be vulnerable. Due to address reuse, about 4 to 10 million Bitcoins are at risk, with exchanges and institutional wallets being the most susceptible. Chaincode Labs’ 2025 research estimates that about 6.26 million Bitcoins, worth between $65 billion and $75 billion, could be exposed to future quantum attacks.

In a January 5 LinkedIn analysis, David Duong pointed out that upgrading Bitcoin’s security is a core challenge. He highlighted two main threats: quantum computers cracking Elliptic Curve Digital Signature Algorithm keys, and attacks on the SHA-256 algorithm underpinning Bitcoin’s proof-of-work. Vulnerable addresses include traditional Pay-to-Public-Key scripts, some multi-signature wallets, and exposed Taproot setups.

Institutional Investors Exit First

Christopher Wood stated in his January 16 analysis column that progress in quantum computing would undermine Bitcoin’s logic as a “reliable store of value,” especially for long-term investors like pension funds. He closed out all 10% Bitcoin exposure in his portfolio, switching to 5% physical gold and 5% gold mining stocks.

Wood, once an early Bitcoin advocate, added it to his portfolio in December 2020 as countries released massive stimulus measures during the pandemic, and increased holdings to 10% in 2021. He said he cleared his position out of concern that quantum computing could shake Bitcoin's foundations, potentially achieving breakthroughs in the coming years, not decades.

Theoretically, quantum computers could crack Bitcoin’s cryptographic algorithms and reverse-engineer private keys used for transaction authorization. Wood said this would destroy Bitcoin’s concept as a value store, thus undermining its position as a digital substitute for gold.

Accelerating Technological Breakthroughs: Threat May Arrive Early

Current quantum computers operate with about 105 quantum bits of computational power. According to AVS Quantum Science research, a 2022 study by Universal Quantum and the University of Sussex estimated that cracking a Bitcoin private key would require 13 million quantum bits.

However, industry insiders disagree on the urgency. Blockstream CEO Adam Back believes the threat may still be 20 to 40 years away. Strategy Chairman Michael Saylor believes that quantum computing will enhance rather than threaten Bitcoin, expecting the network to upgrade and strengthen its defenses.

University of Calgary quantum computing researcher Pierre-Luc Dallaire-Demers offers a more aggressive estimate, believing the threat could become real in about five years. Casa co-founder Jameson Lopp said that preparing Bitcoin for quantum resistance may take five to ten years.

Bitcoin developers have already proposed an upgrade to enhance quantum-resistant security features. This proposal is still in draft and testing. Other blockchain networks are also preparing for the quantum threat with privacy upgrades.

Bitcoin Faces Governance Dilemma: Destroy or Keep?

Bitcoin is facing a governance dilemma. The community is debating whether to destroy quantum-vulnerable tokens to protect system integrity, or do nothing and assume the risk of theft. This choice creates a conflict between protocol security and property rights.

If vulnerable tokens are destroyed, Bitcoin’s effective supply would decrease, theoretically supporting the price, but only after 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 force immediate action.

Cardano founder Charles Hoskinson warned that adopting post-quantum cryptography too early may severely reduce efficiency. The U.S. Defense Advanced Research Projects Agency’s quantum blockchain program thinks a meaningful threat may emerge in the 2030s. However, rapid progress suggests the timeline may accelerate, especially if AI integration compresses quantum development cycles.

Diverging Institutional Attitudes: Cautious and Optimistic

Although Wood has reduced exposure, institutional support has not completely disappeared. Reportedly, Harvard University increased its Bitcoin allocation by nearly 240%. Morgan Stanley began advising its wealth management clients to allocate up to 4% of portfolios to digital assets. Similarly, Bank of America allows allocations of 1% to 4%. This shows that support has not disappeared, but has become more dispersed based on differing risk assessments.

Duong highlighted two major threats: quantum computers cracking ECDSA keys, and attacks on the SHA-256 algorithm underpinning Bitcoin’s proof-of-work system. Vulnerable addresses include traditional Pay-to-Public-Key scripts, some multi-signature wallets, and exposed Taproot setups.

Address—avoiding address reuse and moving tokens to quantum-resistant addresses—is seen as a key mitigation strategy. However, this threat remains real until Bitcoin’s decentralized system can fully coordinate quantum-resistance upgrades.

X platform user batsoupyum wrote: “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 solved, it will be a shackle around Bitcoin’s neck.”

The quantum computing issue has moved from theory to practical impact on portfolios. Bitcoin’s underperformance reflects not only market cycles but also a growing existential risk, shaping how institutions allocate capital and forcing the network to face an unprecedented technical challenge.

Risk Warning and DisclaimerThe market has risks, investment requires caution. This article does not constitute personal investment advice, nor does it take into account any individual user’s specific investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific situation. Invest accordingly, at your own risk.

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