JPMorgan Asset Management has included Bitcoin (BTC) in its annual long-term capital market assumptions report for the first time, according to the firm's projections. The firm expects BTC to grow 10% per year over the next 10 years, with an arithmetic return of 20.9% and annualized volatility of 55%.
Comparison with Traditional Assets
Over the same period, JPMorgan Asset Management projects US large cap equities to rise 7.50% per year, US small cap equities to climb 7.70%, and gold to increase 5.50% annually.
Caveats and Modeling Challenges
The firm highlighted a significant caveat: Bitcoin is still maturing. JPMorgan stated that it does not currently make a case for Bitcoin as a diversifier in portfolios due to its unstable market correlations.
“At the moment, we do not make a case for Bitcoin (BTC) as a diversifier in portfolios due to its unstable market correlations. We see Bitcoin as a speculative asset and a hedge against monetary easing… BTC mostly trades like a high-beta risk asset that tracks global money supply growth, but it is sometimes treated as ‘digital gold.’ Unstable correlations with other assets present a modeling hurdle. A further challenge is forecasting an asset whose fundamentals are not cash flows and whose economics may be as much about adoption, regulation and liquidity as technology,” the firm said.
Industry Reaction
Bitwise CIO Matt Hougan reacted to the development on X, noting the significance of Bitcoin's inclusion despite the caveats.
“First they ignore you, then they laugh at you, then they fight at you, then they add you to their Long-Term Capital Markets Assumptions paper and predict you’ll be the best-performing asset of the next decade,” Hougan wrote. He added: “I know, I know: They have loads of caveats and say the asset is still maturing. Nonetheless, it’s pretty amazing to see.”
The inclusion marks a notable step for Bitcoin in institutional forecasting even as the report emphasizes its evolving status.
