The catalyst for this dramatic reversal is not market performance, but rather an emerging existential risk to the Bitcoin system itself. Research from Chaincode Labs, cited prominently in Wood’s analysis, estimates that between 20 and 50 percent of all bitcoins currently in circulation, totaling between 4 and 10 million BTC, could become vulnerable to theft once cryptographically relevant quantum computers (CRQCs) become a reality.
While quantum computing threats have long been discussed in theoretical circles, the acceleration of development timelines has shifted the conversation from speculation to preparation.
“While GREED & fear does not believe that the quantum issue is about to hit the Bitcoin price dramatically in the near term, the store of value concept is clearly on less solid foundation from the standpoint of a long-term pension portfolio. For that reason, GREED & fear will remove the 10% allocation to Bitcoin this week with 5% reallocated to gold and 5% reallocated to gold-mining stocks,” Wood wrote in his weekly newsletter.
Bitcoin was added to his portfolio with an initial 5% allocation on 17 December 2020 at a price of $22,779 with another 5% allocation added on 4 November 2021 with a price of $61,365.
Despite gold’s recent outperformance over Bitcoin, Bitcoin has still outperformed since the initial allocation, he said, adding that Bitcoin has risen by 325% since 17 December 2020 while gold bullion is up 145% over the same period.
“The existential issue raised by quantum as regards Bitcoin can only be long-term positive for gold since it remains the historically stress tested store of value. Meanwhile, gold is also the best hedge, if not the only one, on the ever rising geopolitical risks,” he said.
In USD terms, gold rallied 66.5% in 2925 and is already up around 7% so far in the calendar year.