JPMorgan’s bitcoin returns forecast puts the cryptocurrency ahead of US stocks, bonds and gold over the next decade, with a 10% annualized base-case return. But the bank’s first research range for bitcoin does not translate into support for it as a portfolio diversifier: JPMorgan still sees volatility and shifting asset correlations as barriers to wider inclusion.
Key takeaways
- JPMorgan’s bitcoin scenarios span -9.7% to 17%.
- The bank models bitcoin’s annualized volatility at 55%.
- Bitcoin remains outside JPMorgan’s main portfolio allocation models.
JPMorgan’s bitcoin returns forecast spans three scenarios
JPMorgan projects annualized bitcoin returns of 10% over the next 10 years, with a bear case of -9.7% and a bull case of 17%. The estimates appear in its 2027 Long-Term Capital Market Assumptions, whose broader forecasting framework covers a 10- to 15-year horizon.
The bank separately assigns bitcoin an arithmetic average annual return of 20.9%. That measure is distinct from the 10% compounded return assumption; the figures are not interchangeable forecasts.
How bitcoin compares with traditional assets
JPMorgan’s base case places bitcoin above its return projections for US equities, bonds and gold. Its assumptions put US bond returns at 5.6%–6.6%, large-cap equity returns at 7.5%, small-cap equity returns at 7.7%, and gold returns at 5.5%.
US real estate investment trusts carry an 8.2% compounded annual return projection, also below bitcoin’s base case.
The higher modeled return comes alongside a much larger volatility estimate. JPMorgan assumes 55% annualized volatility for bitcoin, compared with approximately 18% for US large-cap stocks and 17.2% for gold.
A return projection, not a diversification case
JPMorgan views bitcoin as a speculative investment and a hedge against monetary easing, rather than a portfolio diversifier. Its unstable relationships with other assets and its high volatility have kept it outside the bank’s main portfolio allocation models.
According to portfolio manager Dr Sheena Shah and digital asset strategy head Dennis Cristallo, the cryptocurrency serves only a limited strategic role.
“It lacks a strategic role in portfolios other than as a bet on fiat currency expansion or future asset trading on blockchains,” they said.
The report describes bitcoin as generally trading like a high-beta risk asset tied to global money-supply growth, despite sometimes being treated as “digital gold.” It also identifies forecasting difficulties: bitcoin’s fundamentals are not cash flows, and its economics involve adoption, regulation and liquidity as well as technology.
A research milestone against a skeptical history
The bitcoin returns forecast marks the first time JPMorgan has assigned the asset a return range in its research. Bitcoin’s inclusion forms part of the firm’s 31st annual assumptions report, which covers more than 200 asset classes.
Bitwise chief investment officer Matt Hougan highlighted the forecast while acknowledging JPMorgan’s cautions. The bank’s quantified outlook contrasts with the public skepticism of CEO Jamie Dimon, who called bitcoin a “fraud” in 2017.
Article produced with the assistance of artificial intelligence and reviewed by the editorial team.