According to the Czech Republic's central bank governor, Alex Michl, incorporating bitcoin into the bank's reserves could potentially enhance performance due to its low correlation with traditional assets. However, he cautioned that the cryptocurrency's volatility far exceeds that of other assets, rendering it a risky investment. Michl noted that all assets carry the risk of losing their value, emphasizing the importance of diversification.
The central bank's study revealed that bitcoin can provide high returns with minimal allocations, outperforming gold, but its unpredictability led the bank's board to decide against investing in it. The Czech National Bank had purchased $1 million in bitcoin as part of a test portfolio to gain hands-on experience with blockchain-based assets and their potential to redefine the country's payment and financial systems.