Bitwise Raises Bitcoin Price Target to $1.6 Million by 2036
Bitwise predicts 34% annual growth for Bitcoin
In this article
Introduction to bitwise forecast
According to Bitwise, Bitcoin could reach $1.6 million by 2036, with a 34.3% annual return forecast 1. Chief Investment Officer Matt Hougan said the updated model points to stronger long-term growth 2. The forecast is based on the growth of a combined gold-and-Bitcoin market 1. Bitwise published its 2027 Bitcoin Long-Term Capital Market Assumptions on October 28 2.
Bitwise assumes that the store-of-value market grows from $31.1 trillion to $109.8 trillion by 2036, with Bitcoin capturing 25% 1. The firm also expects the institutional investment market to expand from $216 trillion to $303 trillion 2. Its model assumes institutions allocate between 1% and 5% of their portfolios to Bitcoin 2. This allocation could generate between $1.5 trillion and $7.4 trillion in institutional demand 2.
The prediction is highly sensitive to adoption and market growth, with a bear case of $130,686 and a bull case of $3.67 million 3. Bitwise estimates that new Bitcoin issuance will contribute only around $14 billion annually 2. The growing gap between potential demand and new supply underpins its bullish outlook 2. Bitwise’s valuation framework estimates the future size of markets Bitcoin could serve 1.
Bitwise predicts Bitcoin will reach $1.6 million by 2036
Bitwise valuation framework
Fresh estimates from Bitwise's valuation framework predict the future size of markets Bitcoin could serve, assigning it a share of each, and dividing the combined value by 21 million coins 1. Matt Hougan, Chief Investment Officer, commented on the updated model 2, which forecasts the global market could reach $110 trillion by 2036 2. This growth is a key factor in the firm's price target.
The dominant category is defined as gold and Bitcoin together, expected to grow from $31.1 trillion to $109.8 trillion by 2036 1. It's assumed that Bitcoin will capture 25% of this market 1. The model also estimates that new Bitcoin issuance will contribute only around $14 billion annually 2. Limited supply contributes to the firm's bullish outlook 2.
Institutions controlling about $147 trillion could generate $1.5 trillion to $7.4 trillion in demand by allocating a small percentage of assets to Bitcoin 4. The bear-case scenario puts Bitcoin at $130,686 by 2036, while the bull case reaches nearly $3.67 million 4. The firm's valuation framework is based on analysis of the Bitcoin market and its potential for growth 1, with a price target based on a 34.3% compound annual growth rate 1.
Institutional adoption and demand
Institutional adoption is a key driver of the forecast, with Bitwise expecting institutions to allocate between 1% and 5% of their assets to Bitcoin over the next decade 2. This allocation could generate between $1.5 trillion and $7.4 trillion in institutional demand 2. Bitwise's Chief Investment Officer Matt Hougan said the updated model points to stronger long-term growth 2.
Bullish outlooks are underpinned by the growing gap between potential demand and new supply, with new Bitcoin issuance contributing only around $14 billion annually 4. They could allocate a small percentage of assets to Bitcoin 4, meaning a significant increase in demand 4, considering they have $147 trillion at their disposal 4.
Regulators are also moving to ease bank custody rules, which could widen access for large institutions and drive further adoption 4. A Federal Reserve capital proposal aimed at easing bank custody rules could widen access for large institutions, if adopted 4. U.S. spot bitcoin ETPs hold about $108 billion, according to the report 4.
Market volatility and correlation
Generally, Bitwise models a 27.8% average volatility over the decade, the midpoint between today's level and its 2036 expectation 4. This forecast is based on the firm's analysis of Bitcoin's historical price movements. The company expects volatility to decrease over time, making Bitcoin a more attractive investment option 1.
Bitcoin's correlation with gold will deepen, positioning it as an alternative asset 4. Demand for such assets drives this trend 1, and the firm's report notes that a small percentage of their $147 trillion in assets could be allocated to Bitcoin 4.
JPMorgan's report, released on Oct. 19, highlights the challenges of incorporating Bitcoin into traditional portfolio models due to its high volatility 1. In contrast, the forecast assumes that Bitcoin's volatility will decrease over time, making it a more viable investment option 4. The valuation framework estimates the future size of markets Bitcoin could serve, including gold 1.
Implications for US crypto investors
The forecast has significant implications for US crypto investors, who are looking for long-term growth opportunities 5.
Meanwhile, Bitwise's prediction of a 34% annual growth rate for Bitcoin is substantially higher than the average return forecast for US equities 6.
As the crypto market continues to mature, investors will be watching closely to see if Bitcoin can achieve this level of growth and become a major player 6.
Frequently asked questions
What is Bitwise's forecast for Bitcoin's price in 2036?
Bitwise predicts that Bitcoin will reach $1.6 million by 2036, with a 34.3% annual return forecast 1.
What drives the forecast?
The forecast is driven by institutional demand and limited supply, with a growing gap between potential demand and new supply underpinning the bullish outlook 2.
What are the implications for US crypto investors?
The forecast has significant implications for US crypto investors, who are looking for long-term growth opportunities, with Bitwise's prediction of a 34% annual growth rate for Bitcoin substantially higher than the average return forecast for US equities 5.
About this article
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