PiCK

Summary

  • JPMorgan said Bitcoin is projected to deliver an annualized compound return of 10% over the next decade.
  • JPMorgan said Bitcoin's expected return is higher than its forecasts for U.S. large-cap stocks at 7.5%, private equity at 9.8%, gold at 5.5%, and a 60/40 portfolio at 7%.
  • Zach Pandl, head of research at Grayscale, said Bitcoin could play a role in diversification because of its 0.33 correlation coefficient and high 10% expected return.

Forecast Trend Report by Period

JPMorgan projects Bitcoin will deliver a 10% annualized compound return over the next decade, higher than its forecasts for U.S. large-cap stocks and gold.

In its "2027 Long-Term Capital Market Assumptions" released on November 4, JPMorgan examined Bitcoin's expected return, volatility and correlation with other assets. Under its base-case scenario, the bank estimated a 10% annualized compound return and 55% annualized volatility for Bitcoin.

In an earlier report, JPMorgan projected annual returns of 7.5% for U.S. large-cap stocks, 9.8% for private equity and 5.5% for gold. It put the expected annual return for a 60/40 stock-and-bond portfolio at 7%.

Zach Pandl, head of research at Grayscale, said Bitcoin's correlation coefficient with U.S. large-cap stocks was 0.33, lower than that of international equities, corporate bonds and hedge funds. That means Bitcoin tends to move less closely with stocks, leaving room for it to be used in diversified portfolios.

Pandl added that Bitcoin's expected 10% annualized compound return is higher than the forecast for every other asset class. He said Bitcoin retains strong potential because it is difficult to find an investment that combines high returns with low correlation to core equity holdings.

Doohyun Hwang