JPMorgan Forecasts Bitcoin Returns for the First Time Over 10-15 Years

Analysts at J.P. Morgan Asset Management expect an average annual return on Bitcoin of 10% over the next 10-15 years. This is higher than the forecasts for U.S. stocks, bonds, and gold, according to the annual Long-Term Capital Market Assumptions report for 2027. For the first time in the 31-year history of the study, JPMorgan's asset management division included the first cryptocurrency in its long-term return forecasts. The specialists calculated three scenarios: the base case assumes an average annual growth of 10%, the pessimistic scenario a decline of 9.7% annually, and the optimistic scenario a growth of 17%. In the base case, the forecast exceeds expectations for most traditional instruments. For U.S. large-cap stocks, JPMorgan forecasts 7.5%, for small-cap stocks 7.7%, for real estate investment trusts 8.2%, for U.S. bonds 5.6-6.6%, and for gold 5.5%. The estimates assume reinvestment of profits and account for compound interest.

Despite the optimistic base scenario, JPMorgan maintains a cautious stance. Analysts expect Bitcoin's annual volatility to be around 55% compared to 18% for U.S. large-cap stocks and 17.2% for gold. According to the specialists, sharp price swings and unstable correlation with other assets hinder the broad inclusion of Bitcoin in investment portfolios, so the bank has not yet included the cryptocurrency in its main covariance matrices. Portfolio manager Sheena Shah and head of digital asset strategy Dennis Kristallo noted that they do not consider Bitcoin as a diversification tool. They view it primarily as a speculative asset and a hedge against monetary policy easing. In their assessment, the first cryptocurrency behaves like a high-risk instrument that follows the growth of the global money supply, although market participants periodically perceive it as digital gold. Additional complexities arise from the lack of cash flows typical of stocks or bonds. The analysts emphasized that Bitcoin's economy depends on adoption, regulation, and liquidity as much as on technology. According to them, the asset has no strategic role in portfolios other than betting on the expansion of fiat money supply or future trading of assets on blockchains.

In the new report, JPMorgan also raised long-term expectations for U.S. large-cap stocks by 0.8 percentage points, to 7.5%. The revision was explained by firms' margins above 15% and productivity growth amid the spread of artificial intelligence. The forecast for the return of a global portfolio of 60% stocks and 40% bonds was raised to 7% annually from 6.4% in the previous issue. At the same time, the bank expects increased uncertainty due to inflation volatility, protectionist state policies, and the redistribution of capital flows. Recall that in September, JPMorgan analysts suggested that a decrease in demand for hedging in Bitcoin ETFs could provide the asset with stronger support than gold. The weakening inflow into Bitcoin and gold funds was linked by the bank to the rise in real bond yields and the failure of the CLARITY Act.