According to the Czech Republic's central bank governor, Alex Michl, incorporating bitcoin into the bank's reserves could enhance performance but poses significant volatility risks. In a speech at the Bitcoin 2026 conference, Michl noted, 'Its volatility surpasses that of other assets, with the potential for its value to skyrocket or plummet to zero.' He acknowledged that all assets carry the risk of total value loss, emphasizing the importance of diversified portfolios. 'Any asset can potentially lose its entire value, which is why diversification is key,' Michl stated. Although bitcoin has shown high returns over time, Michl considers it too risky for investment.
The Czech National Bank created a $1 million test portfolio including bitcoin, a USD stablecoin, and a tokenized deposit to gain experience with blockchain-based assets. A study by the CNB found that bitcoin's low correlation with traditional assets could improve portfolio performance without increasing risk. However, the bank's board decided against investing its foreign exchange reserves in bitcoin due to its high volatility.