According to Alex Michl, the Czech Republic's central bank governor, incorporating bitcoin into the bank's reserves could enhance performance due to its low correlation with traditional assets, but its volatility poses a significant risk. Michl emphasized this point during a speech at the Bitcoin 2026 conference, highlighting that bitcoin's price could either skyrocket or plummet to zero.
He noted that all assets carry the risk of losing value, which is why diversification is crucial. Michl shared a personal anecdote about his first bitcoin purchase, which was used to buy a coffee now valued at approximately $350, underscoring the cryptocurrency's unpredictable nature.
Although bitcoin has shown high returns over time, Michl believes it is too risky for investment. The Czech National Bank's $1 million test portfolio, established in November, includes bitcoin, a USD stablecoin, and a tokenized deposit, aiming to gain experience with blockchain-based assets.
A study by the CNB found that bitcoin's low correlation with traditional assets could make it a valuable addition to a portfolio, potentially increasing returns without significantly raising risk. However, the bank ultimately decided against investing its foreign exchange reserves in bitcoin due to its high volatility.