Czech Central Bank Governor Alex Michl noted that incorporating bitcoin into the bank's reserves could potentially enhance performance, but its high volatility poses a significant risk. 'Its price fluctuations are far more pronounced than those of other assets,' Michl stated during the Bitcoin 2026 conference in Las Vegas, 'with the potential for its value to skyrocket or plummet to zero.' Although acknowledging that all assets carry the risk of total value loss, Michl emphasized the importance of diversified portfolios, saying 'it's unwise to put all your eggs in one basket.' Recalling his first experience with bitcoin, where he bought a coffee that would now be worth around $350, Michl conceded that while bitcoin has shown 'exceptionally high returns over time, it appears too risky.' The Czech National Bank made history as the first central bank to buy bitcoin in November, allocating $1 million to a test portfolio consisting of BTC, a USD stablecoin, and a tokenized deposit.
A subsequent study by the CNB revealed that bitcoin's low long-term correlation with traditional assets makes it an attractive addition to portfolios, as it can increase returns without significantly elevating risk. However, the bank ultimately decided against investing its foreign exchange reserves in bitcoin due to its high volatility, despite the potential for higher returns with smaller allocations.