JPMorgan forecasts 10% annual bitcoin returns over next decade, ahead of stocks and gold
In brief
- JPMorgan's base case calls for 10% annualized bitcoin returns over the next 10 years.
- JPMorgan's bear case sits at -9.7%, with a bull case of 17%.
- U.S. large caps were projected at 7.5% and gold at 5.5% in the report.
- Volatility and unstable correlations block bitcoin's widespread portfolio inclusion, JPMorgan said.
The forecast range
JPMorgan's range is wide. The bank set a bear case of -9.7% and a bull case of 17% for bitcoin's annualized returns, CoinDesk reported, and the outlet said it's the first time JPMorgan has put a range on bitcoin returns in its research.
The same report projected 5.6%-6.6% returns for U.S. bonds, 7.5% for U.S. large-cap equities, 7.7% for U.S. small-cap equities and 5.5% for gold (all figures from JPMorgan's report, as cited by CoinDesk).
These are the bank's forecasts, not outcomes.
A cautious bank, still
The New York-based banking group has had a complicated history with cryptocurrency. CEO Jamie Dimon described bitcoin as a "fraud" in 2017, and he's repeated that skeptical position in recent years (with somewhat softer language).
Tuesday's report didn't drop that caution. JPMorgan said bitcoin's volatility and unstable correlation to other asset classes stand in the way of its widespread inclusion in portfolios. The bank didn't argue that bitcoin works as a portfolio diversifier, either. Sheena Shah and Dennis Cristallo instead called it a speculative asset and a hedge against monetary easing.
"It lacks a strategic role in portfolios other than as a bet on fiat currency expansion or future asset trading on blockchains," Shah and Cristallo said.
So the bank sees bitcoin beating stocks and gold in its base case, but it doesn't see a strategic role for it in portfolios beyond those two bets.
Why it's hard to model
The report said bitcoin mostly trades like a high-beta risk asset that tracks global money supply growth, though it's sometimes treated as digital gold. Those unstable correlations with other assets make it hard to model, according to JPMorgan.
The report flagged a further challenge: bitcoin's fundamentals aren't cash flows, and its economics may depend as much on adoption, regulation and liquidity as on technology.
Frequently asked questions
What returns does JPMorgan forecast for bitcoin over the next decade?
JPMorgan's 2027 Long-Term Capital Market Assumptions report set a base case of 10% annualized returns for bitcoin over 10 years, according to CoinDesk. The bank also set a bear case of -9.7% and a bull case of 17%.
How does JPMorgan's bitcoin forecast compare with stocks, bonds and gold?
The report projected 5.6%-6.6% returns for U.S. bonds, 7.5% for U.S. large-cap equities, 7.7% for small-cap equities and 5.5% for gold, per CoinDesk. JPMorgan said it expected bitcoin to outperform all of them over the next 10 years.
Why is JPMorgan still cautious about bitcoin in portfolios?
JPMorgan said bitcoin's volatility and unstable correlation to other asset classes stand in the way of its widespread inclusion in portfolios. Sheena Shah and Dennis Cristallo called it a speculative asset and a hedge against monetary easing, not a diversifier.
