JPMorgan sees 10% annual bitcoin returns, topping stocks, bonds and gold over next decade

Investment banking behemoth JPMorgan (JPM) expects bitcoin (BTC) to outperform U.S. stocks, bonds and gold over the next 10 years.

JPMorgan forecasted a base case of 10% annualized returns for bitcoin over the next 10 years in its 2027 Long-Term Capital Market Assumptions report on Tuesday. The bank also set a bear case of -9.7% and a bull case of 17%.

The figure compared to projected 5.6%-6.6% growth in U.S. bonds, 7.5% and 7.7% in U.S. large and small-cap equities respectively and 5.5% in gold.

The report marks the first time JPMorgan has put a range on bitcoin returns in its research.

The New York based banking group has a complicated history with cryptocurrency, largely due to the association of CEO Jamie Dimon’s widely publicized views of bitcoin. Dimon famously described the world’s largest crypto as a “fraud” in 2017, a skeptical position he has reiterated with somewhat softer verbiage in recent years.

JPMorgan maintained a cautious view of bitcoin in Tuesday’s report, saying its “volatility and unstable correlation to other asset classes…remain an obstacle to [its] widespread inclusion in portfolios.”

Furthermore, the bank does not make a case for bitcoin as a portfolio diversifier, instead viewing it as a “speculative asset and a hedge against monetary easing,” according to comments by portfolio manager Dr Sheena Shah and head of digital asset strategy Dennis Cristallo.

“It lacks a strategic role in portfolios other than as a bet on fiat currency expansion or future asset trading on blockchains,” they added.

“BTC mostly trades like a high beta risk asset that tracks global money supply growth, but it is sometimes treated as ‘digital gold.’ Unstable correlations with other assets present a modeling hurdle. A further challenge is forecasting an asset whose fundamentals are not cash flows and whose economics may be as much about adoption, regulation and liquidity as technology.”