According to the Czech Republic's central bank governor, Alex Michl, incorporating bitcoin into the institution's reserves could potentially enhance performance. However, he cautioned that the asset's volatility far exceeds that of other investments, posing a significant risk.
In a speech at the Bitcoin 2026 conference, Michl noted, 'Its volatility is much higher than other assets. One day its price may surge or plummet to zero.' He acknowledged that all assets carry the risk of losing their value, underscoring the importance of diversified portfolios. 'A stock can become worthless, and even a bond can fail. Therefore, it's unwise to bet on a single asset,' Michl said.
Recalling his first experience with bitcoin, he mentioned buying a coffee that would now cost approximately $350, making it the most expensive coffee of his life. Although bitcoin has demonstrated high returns over time, Michl believes it appears too risky. The Czech National Bank made history as the first central bank to purchase bitcoin in November, allocating $1 million to a test portfolio comprising BTC, a USD stablecoin, and a tokenized deposit.
The pilot, approved by the CNB's bank a month prior, aimed to gain hands-on experience with blockchain-based assets that could redefine the country's future payment and financial systems. A CNB study found that bitcoin's low long-term correlation with traditional assets makes it an attractive addition to portfolios, as it can increase returns without elevating risk. 'When you add an asset like this, the whole portfolio can work better.
Returns can rise, and risk remains about the same,' Michl explained. While bitcoin can provide returns unlinked to other assets, much like venture capital but with greater liquidity, the CNB's Bank Board decided against investing its FX reserves in bitcoin at this time, citing the asset's high risk profile.