Bitcoin could deliver annualized returns of 10% over the next decade, according to JPMorgan Asset Management. But before investors get excited, there is another number worth paying attention to: 55%.
That is the annual volatility JPMorgan associates with Bitcoin, more than three times the volatility of US large-cap stocks.
The bank’s latest long-term capital market assumptions mark a notable step in Bitcoin’s acceptance on Wall Street. For the first time, JPMorgan Asset Management has included the cryptocurrency in its long-term return forecasts, putting it alongside traditional investments such as stocks, bonds and gold.
However, there is an important distinction between recognizing Bitcoin’s return potential and recommending it as part of a diversified portfolio.
JPMorgan sees an opportunity in Bitcoin, but it is not yet convinced that investors are being adequately compensated for the risks they take to capture those returns.
Let’s break down what this means for investors.
1. A 10% Return Forecast Sounds Attractive. But Look Beyond the Number
JPMorgan’s base-case forecast puts Bitcoin’s annualized returns at approximately 10% over the next decade.
On paper, that makes Bitcoin an interesting asset to watch. Investors are constantly looking for opportunities that can deliver long-term growth, particularly when traditional markets face uncertainty.
But a return forecast is not a promise.
The 10% figure represents JPMorgan’s long-term expectation, not a guaranteed annual gain. Bitcoin’s actual performance could be significantly higher or lower, and investors should not expect the cryptocurrency to deliver a smooth, predictable return every year.
Consider what makes Bitcoin different from a traditional stock investment.
- Stocks represent ownership in businesses that generate revenue, earn profits and may pay dividends.
- Bonds generally provide contractual interest payments, subject to the issuer’s ability to meet its obligations.
- Bitcoin does not generate earnings or pay dividends. Its investment returns depend largely on changes in its market price.
Bitcoin’s limited supply and growing acceptance have helped support the investment case for the cryptocurrency. However, its price remains sensitive to investor sentiment, market liquidity, regulation and changing demand.
That makes the 10% forecast an interesting starting point, but not the only number investors should consider.
2. The 55% Volatility Problem
This is where JPMorgan’s outlook gets interesting.
The bank estimates Bitcoin’s annual volatility at around 55%, compared with a much lower level for US large-cap stocks.
Volatility measures how widely an asset’s returns fluctuate. Higher volatility generally means a bumpier investment journey, with larger price swings in both directions.
For Bitcoin investors, those swings can be substantial.
A cryptocurrency can deliver impressive gains during a strong rally and then surrender a large portion of those gains during a downturn. Investors who need to sell during a decline may not have the luxury of waiting for a recovery.
And this is where the difference between earning a return and living through the journey to earn it becomes important.
Imagine two investments that eventually deliver similar long-term results. One rises relatively steadily, while the other experiences repeated, sharp declines.
The second investment may be much harder to hold, especially for investors who are uncomfortable watching a large portion of their portfolio disappear during a market correction.
There is also a mathematical problem with recovering from losses.
- A 20% decline requires a 25% gain to recover.
- A 30% decline requires approximately a 43% gain.
- A 50% decline requires a 100% gain.
This is why severe drawdowns matter so much.
Bitcoin’s volatility can make it difficult for investors to stay invested long enough to benefit from any potential long-term appreciation.
The key question is not simply how much Bitcoin could return. It is how much risk investors must accept along the way.
3. Bitcoin Investors Have Already Seen How Quickly Things Can Change
Bitcoin’s price history offers a practical illustration of this risk.
According to the Bloomberg report, Bitcoin climbed to a peak of just over $126,000 in 2025 before retreating sharply. Investors who bought near that high subsequently saw their holdings lose as much as 50% as prices fell.
A decline of that magnitude can test even investors who believe strongly in Bitcoin’s long-term potential.
For someone who invested near the peak, a 50% loss means their investment would need to double just to return to its original value, assuming no additional investments.
This is particularly relevant for investors who entered the market through Bitcoin exchange-traded funds.
ETFs can make Bitcoin easier to access through familiar investment platforms and brokerage accounts. But easier access does not make the underlying asset less volatile.
An ETF may simplify how an investor buys and holds exposure to Bitcoin, but it does not eliminate the risks associated with Bitcoin’s price movements.
For long-term investors, the challenge is to understand whether they can tolerate those declines without being forced to sell at an unfavourable time.
4. Why JPMorgan Is Still Not Calling Bitcoin a Portfolio Diversifier
Perhaps the most important part of JPMorgan’s assessment is not its return forecast. It is the bank’s decision to stop short of incorporating Bitcoin into its main portfolio models.
The reason is Bitcoin’s unstable correlations with other assets.
To understand why this matters, consider a traditional diversified portfolio.
An investor might hold US stocks for growth, bonds for income and stability, and gold as another source of diversification. The idea is that these assets may respond differently to economic developments and market shocks.
When one part of the portfolio struggles, another may help cushion the decline.
Bitcoin does not consistently provide that kind of protection.
Its relationship with stocks and other investments can change depending on market conditions. At certain times, Bitcoin may move independently of traditional markets. At other times, it may fall alongside stocks as investors reduce exposure to riskier assets.
If Bitcoin and stocks decline together during a market sell-off, holding both may provide less protection than an investor expected.
This does not mean Bitcoin can never contribute to diversification. It means its diversification benefits are not sufficiently dependable for JPMorgan to treat them as an established feature of a balanced portfolio.
The bank’s position is cautious rather than dismissive.
Its researchers suggest that Bitcoin’s usefulness could improve if two things happen:
- Volatility declines, making its price movements less extreme.
- Correlations with other assets become more stable, making its behaviour within a diversified portfolio easier to assess.
Clearer regulation, deeper liquidity and better price discovery could also help Bitcoin develop as an investment asset.
Until then, investors should be careful about assuming that adding Bitcoin automatically makes a portfolio more diversified.
5. Wall Street Is Taking Crypto More Seriously, Even If the Risks Remain
JPMorgan’s decision to include Bitcoin in its long-term capital market assumptions reflects a broader change in how traditional financial institutions approach cryptocurrencies.
For years, crypto was often treated as an asset class that mainstream financial firms preferred to approach cautiously.
That attitude has gradually evolved.
Financial institutions have expanded their involvement through crypto-related investment products, trading services for eligible clients and experiments involving tokenization.
Regulatory developments have also helped create a more defined environment for institutions considering digital assets.
JPMorgan’s own research points to growing interest among investors. In a recent client survey cited in the report, around one in ten respondents said their portfolios held crypto, while roughly 17% said they planned to prioritize crypto.
These figures suggest that digital assets have become part of the investment conversation for a wider group of investors.
However, institutional recognition should not be confused with an endorsement of every crypto investment.
A major financial institution can acknowledge Bitcoin’s potential without recommending that every investor own it.
That distinction is important.
JPMorgan is effectively saying that Bitcoin deserves a place in long-term market analysis, while also recognizing that its volatility and uncertain relationship with other assets remain significant concerns.
For investors, that is a more useful starting point than treating institutional involvement as proof that Bitcoin has become a low-risk investment.
6. What Could Make Bitcoin More Attractive Over the Next Decade?
JPMorgan’s assessment leaves room for Bitcoin’s role in investment portfolios to evolve.
Several developments could influence that outlook.
Lower volatility
If Bitcoin’s price swings become less extreme over time, investors may find it easier to manage their exposure. Lower volatility could also improve its attractiveness relative to the returns it delivers.
More predictable correlations
Bitcoin would be easier to evaluate as a portfolio diversifier if its relationship with stocks, bonds and other assets became more stable.
Clearer regulation
A more defined regulatory framework could give institutions and investors greater clarity about the rules governing digital assets.
Deeper liquidity
Greater market liquidity could improve trading conditions and make it easier for investors to buy and sell without significantly affecting prices.
Broader adoption
Continued participation from individuals, institutions and financial service providers could influence Bitcoin’s long-term demand.
None of these developments is guaranteed, and they would not eliminate Bitcoin’s investment risks.
Still, they help explain why JPMorgan is willing to include Bitcoin in its long-term return assumptions while remaining cautious about its role in balanced portfolios.
7. Bitcoin Is Only One Part of a Much Bigger Investment Story
JPMorgan’s report also looks beyond cryptocurrencies to the forces that could shape investment returns over the next decade.
The researchers highlight three broad themes: economic nationalism, technology adoption and the reconfiguration of global capital.
One of their central expectations is that governments and businesses will invest heavily in areas considered strategically important, from domestic industrial capacity to technological infrastructure.
The report points to a potential $15 trillion wave of global capital expenditure, which could support economic activity and influence asset returns.
Artificial intelligence is a major part of this outlook, but it is not the only area expected to attract investment.
Advances in medicine, robotics and space technology could also contribute to productivity gains and economic growth.
For investors, the broader message is that the next decade’s opportunities may extend across several industries and asset classes.
Bitcoin is part of that conversation, but it is not the entire investment story.
Investors will still need to assess the valuations, risks and long-term prospects of the assets they choose to own.
8. What Should Investors Take Away From JPMorgan’s Bitcoin Forecast?
The biggest lesson is that return potential and portfolio suitability are two different things.
An asset can have attractive expected returns and still be difficult to hold because of its volatility. It can also appreciate significantly over time without providing reliable protection when other investments decline.
For investors evaluating Bitcoin, a few questions are worth considering.
- Can you tolerate a 30% to 50% decline? Your ability to withstand losses matters just as much as your expectations for future gains.
- What role would Bitcoin play in your portfolio? Are you looking for long-term growth, diversification or speculative exposure?
- How much of your portfolio would you allocate to it? A volatile asset can have a much larger effect on overall portfolio risk if it represents a substantial share of your investments.
- Would you be able to stay invested during a prolonged downturn? A long-term investment thesis is difficult to follow if a sharp fall forces you to sell.
- Are you relying on Bitcoin to diversify your holdings? If so, consider whether its behaviour during market stress supports that assumption.
These questions do not automatically lead to a decision to buy or avoid Bitcoin. They help investors determine whether the asset fits their individual goals, time horizon and tolerance for risk.
A 10% expected annualized return may look appealing, but it should be evaluated alongside the possibility of significant losses and the uncertainty surrounding Bitcoin’s future behaviour.
The Bottom Line: Bitcoin Has Wall Street’s Attention, But It Hasn’t Earned a Free Pass
JPMorgan Asset Management’s decision to include Bitcoin in its long-term return assumptions is a meaningful development for an asset that has spent much of its history outside traditional portfolio planning.
The bank sees the potential for Bitcoin to deliver annualized returns of around 10% over the next decade.
But its 55% volatility estimate highlights the challenge of capturing those returns, while its concerns about unstable correlations explain why Bitcoin has not yet been incorporated into its main portfolio models.
This is not a rejection of Bitcoin’s long-term potential. It is a reminder that strong return expectations do not automatically make an asset suitable for every portfolio.
Bitcoin may outperform traditional investments over the next decade. The harder question is whether investors can manage the volatility and uncertainty that come with owning it.
For now, JPMorgan’s message is clear: Bitcoin deserves serious consideration, but its place in a diversified portfolio still depends on how its risks evolve.
Let’s Discuss
If Bitcoin could deliver annualized returns of 10% over the next decade, but came with annual volatility of 55%, would you consider adding it to your portfolio?
Would you see it as a long-term growth opportunity, a speculative investment or an asset that still needs to prove its value as a diversifier?
Share your thoughts with the community.