According to Woofun AI, JPMorgan Asset Management has released its latest long-term forecast, setting Bitcoin's expected compound annualized return at 10%, the highest among all asset classes, a figure that has sparked deep interpretation of allocation logic by institutions such as Grayscale Investments. Although this forecast highlights Bitcoin's high return potential, its extreme volatility has prevented it from being included in JPMorgan's core portfolio models, and this contradiction has become the focal point of current institutional asset allocation discussions. As of 11:45 PM Eastern Time on November 5, 2026, market data showed Bitcoin priced at $75,709, down 6.09%, while Ethereum was priced at $2,231, down 8.14%. Against this backdrop, Zach Pandl, Head of Research at Grayscale Investments, noted on November 4 that Bitcoin's inclusion in JPMorgan Asset Management's 2027 long-term investment forecast marks a new milestone in institutional recognition. In a report published on October 19, JPMorgan conducted a 10-to-15-year analysis of more than 200 major asset classes based on data through September 2026. The results showed that U.S. large-cap stocks carry an expected return of 7.5%, private equity 9.8%, while a traditional 60/40 stock-bond portfolio has an expected annualized return of 7%. By comparison, gold's expected annualized return is only 5.5%. According to data compiled by Woofun AI, Bitcoin's 10% compound annualized return is significantly higher than all of the above traditional asset classes, with its arithmetic average return standing at 20.9%, and the roughly 11-percentage-point gap between the two represents the cost of volatility. The report also provided scenario assumptions: starting from $83,000 as of September 30, 2026, the bull case implies a 16.6% annualized return and the bear case -11.2%, corresponding to approximately $385,500 and $25,300 respectively after ten years. More critically, the expected correlation coefficient between Bitcoin and U.S. large-cap stocks is only 33%, lower than those of international stocks, corporate bonds, and hedge funds, demonstrating its unique value in risk diversification. Pandl emphasized that this low correlation combined with high absolute returns provides portfolio managers with a new diversification tool, and despite its 55% volatility, it remains attractive in long-term allocation. However, high volatility is also the main reason Bitcoin failed to enter JPMorgan's core model. JPMorgan simultaneously assumed a 55% annualized volatility rate, compared with 18% for U.S. large-cap stocks. High volatility combined with unstable correlation is precisely why Bitcoin was not included in the covariance matrix the institution uses to analyze changes in investment return variation, and the institution therefore built a separate smaller matrix to evaluate its risk contribution independently. This means that, in JPMorgan's view, it is difficult to accurately estimate the specific impact of a Bitcoin holding on overall portfolio risk. The institution considers Bitcoin speculative, and its role in a portfolio is closely tied to monetary easing policy. Analysts noted that Bitcoin's value drivers include adoption levels, regulatory conditions, and liquidity, factors that are entirely different from traditional assets supported by cash flows, adding to forecasting difficulty. Although Grayscale Investments used JPMorgan's forecast data to showcase Bitcoin's potential benefits, it also acknowledged that the realization of these benefits depends on future actual returns and the interrelationships among assets. Pandl's analysis indicates that Bitcoin's role in a portfolio will be dynamically adjusted as its characteristics evolve, and investors need to weigh the balance between high returns and high risk. Faced with this complex situation, major financial institutions have offered different allocation recommendations. BlackRock stated on June 23 that allocating 1% to 2% of funds to Bitcoin can serve as an effective diversification tool, because its performance often differs from other investment types, helping to spread risk. BlackRock compared the impact of this allocation ratio on portfolio risk and warned that excessive Bitcoin holdings could significantly increase overall risk, especially compared with holding large-cap technology stocks. Bank of America recommended on December 5, 2025, that suitable clients capable of withstanding higher volatility could allocate 1% to 4% of funds to digital assets. The guidance covers Merrill Wealth Management, Bank of America Private Bank, and the Merrill Edge online investment platform, emphasizing regulated investment products. In addition, Grayscale Investments launched four model portfolios on September 14, composed of various cryptocurrency exchange-traded products. These models use market-cap weighting, rebalance quarterly, and cap any single asset at 40% to control concentration. Final client asset allocation is still determined by advisors, reflecting institutions' cautious approach between risk management and return pursuit. Notably, Grayscale Investments also holds a positive view of recent market events. Although Binance suffered a hack of approximately $6.34 billion on October 29, the largest crypto theft to date, which could undermine market confidence, Grayscale believes this may prompt exchanges to strengthen security measures, thereby improving overall industry safety. The article's author, Kevin Helms, focuses on Bitcoin, blockchain regulation, and global digital asset markets, and his reporting reveals the complex considerations institutions face in embracing digital assets. From JPMorgan's forecast to allocation recommendations from major banks, Bitcoin is gradually moving from an fringe asset toward mainstream portfolios, but its high volatility and speculative nature remain risk factors that cannot be ignored. In the future, as the regulatory environment becomes clearer and adoption levels rise, Bitcoin's role in institutional asset allocation may become further defined, offering investors more diversified options.