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 assets, 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 be much higher or it could drop to zero.' He emphasized that while all assets carry the risk of losing value, diversification is key to mitigating such risks. Michl shared a personal anecdote about his first experience with bitcoin, purchasing a coffee that would now be worth approximately $350, highlighting the asset's unpredictable nature.
Although bitcoin has demonstrated high returns over time, Michl believes it is too risky for investment. The Czech National Bank created a $1 million test portfolio in November, which includes bitcoin, a USD stablecoin, and a tokenized deposit, to gain hands-on experience with blockchain-based assets.
A study by the CNB found that bitcoin's low correlation with traditional assets could make it a valuable addition to a portfolio, potentially driving higher returns without significantly increasing risk. Despite this, the Bank Board decided against investing its foreign exchange reserves in bitcoin due to its volatility.