According to the Czech Republic's central bank governor, Alex Michl, incorporating bitcoin into the institution's reserves could enhance performance due to its low correlation with traditional assets. However, he cautioned that its volatility poses a significant risk. In a speech at the Bitcoin 2026 conference, Michl noted that bitcoin's price could either skyrocket or plummet to zero.
He emphasized the importance of diversification, stating that no asset is completely risk-free. The Czech National Bank's $1 million test portfolio, which includes bitcoin, a USD stablecoin, and a tokenized deposit, was established to gain hands-on experience with blockchain-based assets. A study by the bank found that bitcoin's low long-term correlation with traditional assets makes it a potentially valuable addition to a portfolio, as it can increase returns without significantly raising risk. Nonetheless, the bank's governing board decided against investing its foreign exchange reserves in bitcoin due to its high risk profile, despite acknowledging its potential to drive higher returns, even with small allocations.