Newsletter
- JPMorgan Asset Management expects that Bitcoin will have a compound annual return of 10% over the next 10 to 15 years, which is the first time the institution has made such a long-term forecast for this asset.
- This forecast is higher than its expected returns of 7.5% for the U.S. broad market stocks and 5.5% for gold, but this is on the premise that Bitcoin has an annualized volatility of up to 55%.
- The institution has not included Bitcoin in its main investment portfolio model, citing its high volatility and unstable correlation, and stated that the bullish logic of "currency devaluation" is "not accurate."
Bitcoin has just made it onto Wall Street’s most closely watched list of return forecasts, and it even tops the list.
JPMorgan Asset Management released a report titled "Long-Term Capital Market Assumptions for 2027" on Monday, predicting that Bitcoin will have a compound annual return of 10% over the next 10 to 15 years.
This is the 31st consecutive year that this report has been released, and for the first time, Bitcoin has been included in it. This forecast exceeds the institution's expectations for returns of 7.5% for the US large-cap stocks, 5.5% for gold, and 7% for the classic 60/40 stock-bond portfolio.
But the issue lies in volatility. The report estimates that the annualized volatility of Bitcoin is 55%, while that of gold is about 17%. This is also why the arithmetic average return on Bitcoin, which is simply the average increase across different years, is 20.9%, more than double the compound return that investors can actually retain after experiencing significant price fluctuations.
The institution did not further incorporate Bitcoin into its models used to depict the interrelationships between various assets. The report states, "For the first time, we have provided a range of Bitcoin returns, but we have not yet included Bitcoin in our main covariance matrix." Instead, JPMorgan Chase established a separate, smaller matrix to compare Bitcoin with certain assets, noting that the high volatility and unstable correlation of this cryptocurrency are obstacles to its widespread inclusion in investment portfolios.
Bitwise Chief Investment Officer Matt Hougan welcomed this prediction, although he did not agree with all the assumptions. He wrote on X: "At first they ignored you, then they laughed at you, next they opposed you, and in the end they included you in their 'Long-Term Capital Market Assumptions' report, predicting that you would become the best-performing asset over the next decade."
Hougan believes that JPMorgan's assumption of a 55% volatility is too high, and therefore its return forecasts are also overly conservative. Bitwise, who manages the crypto index fund and ETF, also has a vested interest in this view.
At the time of this prediction, JPMorgan Chase is also deepening its own blockchain initiatives. The bank is introducing JPM Coin – a token representing US dollar deposits – onto Ethereum and has joined efforts related to tokenized stocks alongside BlackRock, Goldman Sachs, and the American Depository Trust and Clearing Corporation (DTCC).
This time point is also quite noteworthy. On Monday, the US spot Bitcoin ETF recorded a net inflow of $526.7 million, marking its best single-day performance since September 22nd, with BlackRock IBIT seeing an inflow of $665.2 million. As a result, the cumulative net outflow for October has narrowed to approximately $88 million.
Bitcoin is hovering around $82,000, while the yield on 10-year U.S. Treasury bonds remains above 5%, which represents a source of competitive returns with much lower volatility. JPMorgan Chase' own forecasts for global bond returns are also at their highest level in 20 years.
