Bitwise Raises Bitcoin 10-Year Target to $1.6M, Institutional Demand Absorbs New Supply

Bitwise Raises Bitcoin Ten-Year Benchmark Scenario to $1.6 Million by 2036

New York, NY – Crypto asset management firm Bitwise has significantly revised its long-term outlook for Bitcoin, projecting a benchmark scenario target of approximately $1.6 million by 2036. This upward revision, detailed in their “2027 Bitcoin Long-Term Capital Market Assumptions” report, assumes an annualized compound growth rate of 34.3%. The report, authored by Chief Investment Officer Matt Hougan and Head of Research Ryan Rasmussen, also outlines expected volatility, correlation, and a proposed allocation range for institutional investors.

Revised Outlook and Key Assumptions

The new ten-year target of $1.6 million surpasses Bitwise’s previous projection of $1.3 million from last year. This adjustment is made in comparison to traditional asset assumptions for equities and private equity. The firm has identified potential risks to this outlook, including breakthroughs in cryptography driven by quantum computing and AI, as well as regulatory reversals. Investors are advised to monitor three key areas: the actual progress of institutional allocation, whether the traditional four-year halving cycle continues to diminish in impact, and the potential escalation of the technological and regulatory risks highlighted in the report.

Projections and Institutional Allocation

According to the Bitwise report, the benchmark scenario target of $1.6 million by 2036 is accompanied by an assumed annualized compound growth rate of 34.3%. The average volatility is projected at 27.8%, with an assumed correlation to U.S. equities of 0.43. The report suggests an allocation range of 1% to 5% of an investment portfolio for institutional investors.

The firm’s press release contrasts Bitcoin’s ten-year expected return with assumptions for U.S. equities (approximately 6.7%) and private equity (around 10.8%), positioning Bitcoin as potentially one of the best-performing major institutional asset classes over the next decade.

Demand-Supply Dynamics and Market Impact

Citing World Bank estimates, Bitwise notes that institutional investors manage approximately $147 trillion in assets. A 1% to 5% allocation to Bitcoin over the next decade could translate to a potential demand of $1.5 trillion to $7 trillion. This projected demand is set against an annual new supply of roughly $14 billion in Bitcoin. The firm emphasizes that this demand-supply gap is a core driver of their revised price target, contingent on actual allocations occurring and capital not being offset by other channels.

Market Developments and Risk Factors

The report also references the approximately $108 billion in holdings within U.S. spot Bitcoin ETPs and observes an expansion in banking custody and brokerage services. Hougan stated in the press release that shallower drawdowns over the past year, regulatory advancements, and rising demand for hard assets are the primary reasons for increasing the ten-year target from $1.3 million to $1.6 million.

Bitwise anticipates that Bitcoin will show signs of maturity by 2026, with drawdowns from its peak in October 2025 to a low in June 2026 estimated at around 50%. This is shallower than the typical drawdowns of 77%, 84%, and 86% seen in past cycles. The firm expects the strength of the four-year cycle to weaken with increasing institutionalization, though Bitcoin is still likely to experience significant volatility and notable, albeit gradually converging, drawdowns.

Bitcoin Magazine also excerpted from the report, noting that Bitcoin’s correlation with gold reached approximately 0.58 in September 2026. Bitwise anticipates that the store-of-value narrative may deepen, potentially benefiting Bitcoin. An increased correlation could bolster the institutional argument for Bitcoin but might also lead to Bitcoin being dragged down when gold weakens.

Finally, Bitwise identifies its primary risk factors: quantum computing, AI-driven mathematical breakthroughs, and regulatory reversals. The firm also cautions that Bitcoin’s verifiable history is relatively short, leading to high uncertainty in future returns extrapolated from historical data.