A Bitcoin advocate urged the Federal Reserve to add BTC to stress tests
Crypto journalist
Anas Hasan
Crypto journalist
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Bitcoin bond company CEO Pierre Rochard has publicly called for the Federal Reserve to include Bitcoin as an explicit variable in its 2026 regulatory stress tests, citing the asset's high volatility and growing institutional adoption to give it independent treatment in bank risk assessments.
A Jan. 20 letter to the Federal Reserve Board challenges the practice of grouping bitcoin with other cryptocurrencies and proposes a benchmark based on the asset's historical performance dating back to 2015.
Rochard's submission comes amid recent confusion over the US government's conflicting policies on Bitcoin holdings, and assets deleted from Zamora's wallet violated Executive Order 14233, which requires held Bitcoins to be transferred to the Strategic Bitcoin Reserve rather than released.
However, the Department of Justice later confirmed through White House crypto advisor Patrick Witt that the 57.5 BTC “has not been resolved and will not be resolved,” resolving speculation after blockchain analysts traced the November transfer to Coinbase's Prime address.
Extreme flexibility requires a different treatment
Rochard's letter provides detailed analysis showing Bitcoin's 73.3% annualized real volatility over the 2015-2026 sample period, compared to just 18.1% for the S&P 500 over the same time frame.
The analysis showed a peak-to-trough drop of 83.8%, with daily return tailings ranging from -10.0% at the 1st percentile to 10.7% at the 99th percentile, well above typical asset behavior.
“Bitcoin's risk profile is unusually idiosyncratic and materially nonlinear: it has experienced frequent, deep peak-to-trough weakness and periods of very high volatility,” Rochard wrote.
They argue that these assets affect valuations, margin requirements, counterparty exposures, and liquidity needs “in ways that cannot be reliably predicted from other situational variables.”
The submission includes a corollary correlation analysis of Bitcoin's volatile dependence structure with macroeconomic variables, showing negative to strong correlations between Bitcoin and S&P 500 returns over 90 observation windows.
“The fixed ‘beta' mapping from stocks (or risk sentiment) to bitcoin may understate risk in some buyers and overestimate it in others,” Rochard warned. It makes clear conditions necessary for continuous stress testing in banks.
Implementation reduces model variance
Rochard recommends that the Federal Reserve provide quarterly Bitcoin price paths for fundamental, negative and severe downside scenarios, with alternative daily paths for global-market-shock data sets.
He suggests three methods of adjustment:
Historical behavior is associated with peak-to-trough fluctuations and realized-volatility percentiles of dominant time-series models with different volatility jump-spread frameworks for bull and bear markets with stochastic volatility clearly represent tail risk.
“The measurement's goal is not to predict bitcoin, but to provide a consistent and rigorous, but compelling, way that stress tests can be translated into market and associated outcomes,” Rochard explained.
He emphasized that companies without exposure to Bitcoin can easily ignore the variable, while those with direct or indirect exposure, instead of relying on inconsistent proxy estimates, find “transparency, repeatability and the meaning of a series of events.”
The timing coincides with broader market anxiety, with bitcoin falling to $88,000 amid $1.07 billion in liquidity in 24 hours, while gold surpassed $4,800 an ounce.
The divergence has renewed debate over Bitcoin's role as a risk asset or a strategic reserve, especially after President Trump's threat to impose tariffs on Greenland led to a flight from US assets.
“What the gold price is telling us is that we're losing our reserve currency status at an accelerated rate,” Galaxy CEO Mike Novogratz said, adding that bitcoin “is still seen as a selloff, which is disappointing.”
The Federal Reserve's comment period for the 2026 stress test scenarios closes on February 21.
Senator Cynthia Lammis, who previously criticized potential government bitcoin sales as a “waste of strategic assets,” has introduced legislation that would allow up to 1 million bitcoins to be acquired over five years through budget-neutral means, including tariff revenue and gold reserves.
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