J.P. Morgan Asset Management assigns Bitcoin a 10% compounded annual return in its long-term capital market assumptions, compared with an arithmetic average return of 20.9%. The difference results from volatility drag, which amounts to 10.9 percentage points for Bitcoin, based on an estimated volatility of 55%. At the same average return, Bitwise and Grayscale consider this volatility excessive, with Grayscale reporting a recent 12-month realized volatility of 43%. A regularly rebalanced position would suffer less drag than a portfolio entirely invested in Bitcoin, while applying the 10% rate to a Bitcoin price of $81,340 mechanically leads to $340,000 in 2041.
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