Wall Street has begun to take Bitcoin's long-term returns seriously, but it still faces a risk hurdle before it can fully integrate it into mainstream asset allocation.
On October 19, J.P. Morgan Asset Management released its long-term capital market assumptions report for 2027, which for the first time included Bitcoin in its long-term return forecasts, projecting an annualized compound return of about 10% in a baseline scenario over the next 10 to 15 years.
This forecast is higher than the report's projected annualized return assumptions of 7.5% for U.S. large-cap stocks and 5.5% for gold. Thus, Bitcoin has entered the long-term return calculation framework of traditional asset management institutions, but that does not mean J.P. Morgan has advised investors to buy it.
The report also clarified that Bitcoin has not yet been included in its primary asset covariance models.
What judgments lead to the 10% return expectation?
J.P. Morgan’s long-term capital market assumptions are not short-term price predictions but are used to assess the potential returns and risks of different assets over the next 10 to 15 years.
In this framework, Bitcoin for the first time has its own long-term return forecast. Institutional research is starting to attempt comparisons within the same long-term analytical framework alongside traditional assets like stocks and gold.
However, this does not guarantee Bitcoin's future price. Long-term return assumptions depend on models and scenario judgments, and actual performance will still be affected by market liquidity, regulatory policies, the degree of investor adoption, and the macroeconomic environment.
More importantly, a high return rate does not necessarily mean a higher risk-adjusted investment value.
The biggest obstacle remains volatility
The report estimates that Bitcoin's annualized volatility is around 55%, significantly higher than the approximately 18% level of U.S. large-cap stocks.
This also represents a key difference between return forecasts and actual allocations. Bitcoin may have higher potential for long-term returns, but severe price volatility increases the drawdown pressure during holding periods and makes it more difficult to establish stable correlations with other assets.
For institutional investors, asset allocation is not just about comparing who has higher expected returns, but also assessing how assets perform under different market conditions and whether they can improve the overall risk-return structure of the portfolio.
J.P. Morgan’s decision to provide a long-term return forecast for Bitcoin while not yet including it in primary allocation models reflects this cautious attitude.
How far is it from research coverage to formal allocation?
Bitcoin’s entry into the research framework of traditional financial institutions is backed by the gradual improvement of trading and custody infrastructure. Spot ETFs, futures, options, and institutional-grade custody services provide investors with more avenues for participation.
However, the maturation of these infrastructures does not automatically mean institutions will increase their allocations. The research department can establish return assumptions for an asset, but portfolio managers still need to assess whether it fits specific risk budgets and allocation goals.
J.P. Morgan also noted that as Bitcoin’s volatility decreases, correlations with other assets stabilize, and regulatory frameworks and market liquidity improve, it may reassess its positioning in investment portfolios in the future.
This real change is not that J.P. Morgan predicts how much Bitcoin will rise, but that Bitcoin has started to enter the long-term return calculations of traditional asset management institutions. As for when it will transition from a research subject to a formally allocated asset, that still requires the market to provide a more stable risk performance in response.
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