According to the Czech Republic's central bank governor, Alex Michl, incorporating bitcoin into the bank's reserves could potentially enhance performance. However, he cautioned that its volatility surpasses that of other assets, posing a significant risk. Michl noted, 'Its volatility is much higher than other assets.
One day its price may be much higher or it could drop to zero.' He acknowledged that all assets carry the risk of losing their value, emphasizing the importance of diversified portfolios. 'A stock can plummet to zero, and even a bond can fail. This is why it's unwise to bet on a single asset,' he stated.
Michl shared his personal experience with bitcoin, recalling that the first time he used it, he bought a coffee that would now cost approximately $350, making it the most expensive coffee of his life. Although bitcoin has shown high returns over time, Michl insisted that it appears too risky. The Czech National Bank created a $1 million test portfolio in November, including bitcoin, a USD stablecoin, and a tokenized deposit, to gain hands-on experience with blockchain-based assets.
A study by the CNB found that bitcoin has low long-term correlation with traditional assets, meaning it doesn't move in the same direction, which is significant. Michl explained, 'When you add an asset like this, the entire portfolio can perform better.
Returns can increase while risk remains relatively stable.' He added that over the long term, bitcoin can provide returns that aren't closely linked to other assets, likening it to venture capital but more liquid. Despite finding that bitcoin has the potential to drive higher returns with smaller allocations, even more so than gold, the CNB's Bank Board decided not to invest its FX reserves in bitcoin at this time, as stated in a study dated February 2026.