- J.P. Morgan Asset Management has published its first long-term bitcoin forecast: 10.0% a year over a decade, with a of 16.6% and a of -11.2%.
- The same report puts bitcoin’s annualised volatility at 55.0%, against 17.2% for gold, whose forecast return is 5.5%.
- Bitcoin was kept out of the firm’s main covariance matrices. The authors write that full integration is “premature”.
One of the world’s largest asset managers has attached a long-term return number to bitcoin for the first time: 10% a year over the next decade. The same document declines to put bitcoin into the models that actually shape how the firm allocates money.
Numbers like this are how large institutions decide what to own. A pension fund doesn’t buy bitcoin because a headline said so, it buys when the asset turns up in the assumptions its allocation models run on. Bitcoin now has a number. It does not yet have a place in the models, and the same page that gives you 10% also gives you a scenario where bitcoin loses 11.2% a year for ten years.
What this report actually is
Every year, J.P. Morgan Asset Management publishes its Long-Term Capital Market Assumptions, a set of expected returns and risk figures for more than 200 asset classes over a ten to fifteen year horizon. This is the 31st edition. Pension schemes, insurers and advisers feed these assumptions into their own models when deciding how to split money between equities, bonds, property and the rest.
So it isn’t a price target and it isn’t a recommendation. Nobody at the bank is telling anyone to buy anything, and neither are we. It’s a house view on what an asset might return on average over a long stretch, published as an input for people doing sums.
The bitcoin section was written by Dr Sheena Shah and Dennis Cristallo. “We initiate a long-term return forecast for BTC this year,” they write, “while stopping short of its full inclusion in our covariance matrices.” Both halves of that sentence matter, and only one of them travelled.
Where the 10% comes from
A covariance matrix is the grid that sits underneath a model portfolio: how much each asset moves, and how it moves against everything else. It’s what lets an allocator work out whether adding something reduces risk or adds to it. Bitcoin didn’t go into the main grids. It was given a separate standalone illustrative matrix instead, a side table rather than a seat at the table.
The 10% figure is not the output of one model. It’s a weighted blend of three: a framework comparing bitcoin’s supply growth to money supply growth (65% of the weight), a gold-complement rotation model (30%), and a network adoption model (5%). That third framework, taken alone, implies a base case of -3.2% a year. The headline number is an average of methods that disagree with each other.
Set against gold, the contrast is sharper than the return figures suggest. Gold is forecast at 5.5% a year with 17.2% volatility. Bitcoin is forecast at roughly double the return with more than three times the swing.
Why it stayed out of the main models
Volatility of 55% is the number doing the real work here. It means an average annual return of 10% is an average you would rarely actually experience in any single year. The report’s authors are blunt about the consequence: “The volatility and unstable correlation of assets like bitcoin (BTC) remain an obstacle to their widespread inclusion in portfolios.”
A diversifier, in this context, is an asset that tends to move differently from the rest of a portfolio, so that it cushions a fall somewhere else. JPMAM says bitcoin doesn’t qualify yet, because its correlations with other assets keep changing. “We do not make a case for bitcoin (BTC) as a diversifier in portfolios,” the authors write. “We see bitcoin as a speculative asset and a hedge against monetary easing.” They also say any allocation should be stress tested thoroughly against both the bull and bear cases.
These are the firm’s own words about its own product, published in its own report, so read them as the bank’s framing rather than as an independent finding. That framing happens to be more cautious than most of the coverage of it.
Two versions of the same bank
JPMorgan’s chief executive Jamie Dimon has spent years publicly disparaging bitcoin. The asset management arm has now published a long-term return assumption for it. Both things are true at once, and they aren’t quite in contradiction: a research team putting a range on an asset is a different act from a chief executive endorsing it.
The reaction from the crypto industry treated it as a milestone anyway. Bitwise chief investment officer Matt Hougan posted “First they ignore you, then they laugh at you, then they fight at you”, and Strategy chairman Michael Saylor wrote “Wall Street is doing the math”. Those posts reached us through The Block’s reporting rather than from the original X posts, and neither man speaks for JPMorgan.
What to watch
Next year’s edition. If bitcoin moves out of the standalone illustrative matrix and into the main covariance matrices, that is the moment the forecast starts influencing real allocation decisions rather than sitting beside them. The authors call that step premature for now, which is a timing judgement rather than a refusal.
The second thing worth watching is whether other large allocators publish comparable assumptions. One house view is a data point. Three or four, with numbers in the same neighbourhood, would be the start of a consensus, and consensus is what moves institutional money. Our markets coverage will pick up the next one.