The report marks the first time JPMorgan has put a range on bitcoin returns in its research, though the bank remains cautious about BTC's role in portfolios.
- JPMorgan projects bitcoin will return 10% annually over the next decade in its base case, outpacing its forecasts for U.S. stocks, bonds and gold.
- The bank’s first range of long-term bitcoin forecasts spans from a 9.7% annual loss in its bear case to a 17% annual gain in its bull case.
- JPMorgan remains cautious about bitcoin, describing it as a speculative asset whose volatility and unstable correlations hinder its widespread inclusion in investment portfolios.
Investment banking behemoth JPMorgan (JPM) expects bitcoin
JPMorgan forecasted a base case of 10% annualized returns for bitcoin over the next 10 years in its 2027 Long-Term Capital Market Assumptions report on Tuesday. The bank also set a bear case of -9.7% and a bull case of 17%.
The figure compared to projected 5.6%-6.6% growth in U.S. bonds, 7.5% and 7.7% in U.S. large and small-cap equities respectively and 5.5% in gold.
The report marks the first time JPMorgan has put a range on bitcoin returns in its research.
The New York based banking group has a complicated history with cryptocurrency, largely due to the association of CEO Jamie Dimon’s widely publicized views of bitcoin. Dimon famously described the world’s largest crypto as a “fraud” in 2017, a skeptical position he has reiterated with somewhat softer verbiage in recent years.
JPMorgan maintained a cautious view of bitcoin in Tuesday’s report, saying its “volatility and unstable correlation to other asset classes…remain an obstacle to [its] widespread inclusion in portfolios.”
Furthermore, the bank does not make a case for bitcoin as a portfolio diversifier, instead viewing it as a “speculative asset and a hedge against monetary easing,” according to comments by portfolio manager Dr Sheena Shah and head of digital asset strategy Dennis Cristallo.
“It lacks a strategic role in portfolios other than as a bet on fiat currency expansion or future asset trading on blockchains,” they added.
“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.”
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