According to the Czech Republic's central bank governor, Alex Michl, incorporating bitcoin into the bank's reserves could potentially enhance performance. However, he cautioned that the asset's volatility surpasses 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 skyrocket, or it could plummet to zero.' Michl acknowledged that all assets carry the risk of total value loss, which is why diversification is crucial. 'A stock can become worthless, and even a bond can fail.
Therefore, it's unwise to bet on a single asset,' he stated. Recalling his first experience with bitcoin, Michl mentioned buying a coffee, which would now cost approximately $350, making it the most expensive coffee he's ever purchased. Although bitcoin has shown high returns over time, Michl believes it appears too risky. The Czech National Bank made history as the first central bank to purchase bitcoin, announcing a $1 million test portfolio in November.
The portfolio includes BTC, a USD stablecoin, and a tokenized deposit, aiming to gain hands-on experience with blockchain-based assets. A CNB study found that bitcoin has a low long-term correlation with traditional assets, which could make it a valuable addition to a portfolio. Michl explained, 'When you add an asset like this, the entire portfolio can perform better.
Returns can increase, and risk remains relatively stable.' Despite the potential for higher returns, the CNB's Bank Board decided against investing its FX reserves in bitcoin due to its high risk profile.