According to the Czech Republic's central bank governor, Alex Michl, incorporating bitcoin into the bank's reserves could potentially enhance performance due to its low correlation with traditional assets. However, Michl cautioned that the cryptocurrency's volatility surpasses that of other assets, posing a significant risk.
In a speech at the Bitcoin 2026 conference, Michl noted that bitcoin's price fluctuations are extreme, stating, 'One day its price may be much higher or it could go to zero.' He emphasized the importance of diversification, acknowledging that all assets carry the risk of losing value. Michl shared a personal anecdote about his first experience with bitcoin, purchasing a coffee that would now be worth approximately $350, underscoring the cryptocurrency's unpredictable nature.
Despite recognizing bitcoin's potential for high returns, Michl deemed it 'too risky' for investment. The Czech National Bank had created a $1 million test portfolio in November, which included bitcoin, a USD stablecoin, and a tokenized deposit, to gain hands-on experience with blockchain-based assets. A subsequent study found that bitcoin's low long-term correlation with traditional assets could make it a valuable addition to a portfolio, potentially increasing returns without significantly raising risk. Nevertheless, the bank's Board decided against investing its foreign exchange reserves in bitcoin due to its high volatility.