JPMorgan Asset Management has included Bitcoin in its long-term capital market assumptions for the first time, projecting that its returns over the next decade could outpace stocks, bonds, and gold, a move seen as a milestone in Bitcoin's acceptance on Wall Street. The problem, however, is that Bitcoin's extreme volatility may weaken its appeal on a risk-adjusted basis. JPMorgan Asset Management's base case projects a 10% annualized return for Bitcoin over the next decade, but simultaneously assumes an annualized volatility of 55%, more than three times the volatility of large-cap U.S. stocks. The firm said in a report this week that because Bitcoin's correlation with other assets is unstable, it has not yet included it in its main portfolio models. High volatility erodes compound returns, because a larger gain is needed to recover after a significant loss. Bitcoin ETF investors are familiar with this: if they bought near Bitcoin's peak of just above $126,000 in 2025, their holdings at one point suffered losses of as much as 50% as prices fell back. The JPMorgan Asset Management team, including Tim Lintern, Thushka Maharaj, and Sean Daly, wrote: "We believe it is still too early to view Bitcoin as a diversifier in a balanced portfolio. But if volatility continues to decline and correlations with other assets stabilize, the situation could change in the future, especially as regulation becomes clearer and liquidity and price discovery continue to improve." Since the pandemic, several Wall Street institutions have stepped up their presence in the cryptocurrency space, moving from cautious inquiries to more substantive experiments, including offering certain coin trading to clients, launching crypto-themed funds, and experimenting with tokenization. JPMorgan Asset Management analysts said that although many investors still view Bitcoin as a speculative asset, they are still exploring cryptocurrencies. Recent surveys show that one in ten clients say their portfolios hold cryptocurrencies, and about 17% say they plan to "prioritize allocations to cryptocurrencies." Part of the reason is that the regulatory framework has become more mature and clear. Still, the firm's researchers said that due to "unstable correlations" with other assets, Bitcoin is not yet sufficient to serve as a diversifier in a balanced portfolio. They wrote: "If correlations stabilize and volatility declines, Bitcoin's portfolio utility could improve in the future." More broadly, the researchers explored in the report how "economic nationalism, technology adoption, and capital reallocation" may drive asset returns over roughly the next decade. They concluded that governments will invest in "national resilience," and companies will race to deploy new innovations, factors that will influence how capital is allocated. They said a $15 trillion "global capex supernova" will drive growth and strong asset returns. The report said: "Today's technology adoption is almost synonymous with artificial intelligence, but over the next decade, breakthroughs in other areas, from medicine to robotics to space, may also further support trend growth through investment and productivity."
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