JPMorgan forecasts 10% annual Bitcoin return, with a volatility caveat

J.P. Morgan Asset Management projected a 10% compound annual return for Bitcoin over the next 10 to 15 years. The forecast appeared in the firm's 2027 Long-Term Capital Market Assumptions, released Monday. The report is the 31st annual edition and the first to include Bitcoin. Bitcoin's projected return exceeded the firm's forecasts for U.S. large-cap stocks at 7.5%, gold at 5.5% and a 60/40 stock-bond portfolio at 7%.

The report estimated Bitcoin's annualized volatility at 55%, compared with about 17% for gold. The report put Bitcoin's arithmetic average return, a simple average of yearly gains, at 20.9%. Large price swings explain the difference between the arithmetic average and the compound return investors would retain. JPMorgan did not include Bitcoin in the firm's main covariance matrices, which model how assets move together. JPMorgan instead built a separate, smaller matrix comparing Bitcoin with a subset of assets. The firm cited Bitcoin's volatility and unstable correlations as obstacles to widespread portfolio inclusion.

JPMorgan called the argument that currency debasement will spark a rush into crypto "wide of the mark." Bitwise Chief Investment Officer Matt Hougan welcomed Bitcoin's inclusion in the forecasts. Hougan argued that JPMorgan's 55% volatility assumption is too high and consequently makes the return forecast too conservative. Bitwise manages crypto index funds and ETFs and has a stake in that assessment.

JPMorgan is bringing JPM Coin, a token representing dollar deposits, to Ethereum. JPMorgan has also joined BlackRock, Goldman Sachs and the DTCC in tokenized stock efforts.

U.S. spot Bitcoin ETFs attracted $526.7 million on Monday, the strongest daily inflow since September 22. BlackRock's IBIT attracted $665.2 million. Monday's inflows reduced October's net outflows for U.S. spot Bitcoin ETFs to about $88 million.

Bitcoin traded around $82,000. The 10-year Treasury yield remained above 5%, offering a competing return with far less volatility. JPMorgan's global bond forecasts are the firm's highest in two decades.