According to Alex Michl, the Governor of the Czech Republic's central bank, incorporating bitcoin into the institution's reserves could potentially enhance performance due to its low correlation with traditional assets. However, Michl emphasized the significant volatility of bitcoin, stating that its value could either skyrocket or plummet to zero.
This unpredictability, Michl warned, makes it an unwise choice for investment, especially when considering the diversification of assets. The central bank's study found that bitcoin can provide returns that are not closely tied to other assets, similar to venture capital but with higher liquidity. Despite this potential, the bank's board has decided against investing its foreign exchange reserves in bitcoin due to the associated risks.