According to the Czech Republic's central bank governor, Alex Michl, incorporating bitcoin into the bank's reserves could enhance performance due to its low correlation with traditional assets, but its high volatility poses a significant risk. In a speech, Michl noted that bitcoin's price can fluctuate drastically, potentially reaching zero. While acknowledging that all assets carry the risk of losing their value, Michl emphasized the importance of diversification.
The central bank had purchased $1 million in bitcoin as part of a test portfolio to gain hands-on experience with blockchain-based assets. Although the study found that bitcoin can provide high returns with minimal correlation to other assets, the bank's board decided against investing its foreign exchange reserves in bitcoin due to its riskiness.