Written by: Bitwise
Compiled by: Luffy, Foresight News
On October 28, crypto investment firm Bitwise released this year's Bitcoin long-term capital market assumptions report, raising its 2036 target price for Bitcoin to $1.6 million, corresponding to an annualized expected return of 34.3%. The report continues to use last year's valuation model, raising the target due to the expansion of the addressable market size for value storage, institutional investment, and other areas. Although Bitcoin has retraced more than 50% over the past year, institutions have increased their positions against the trend, volatility has gradually converged, and Bitcoin's share of the value storage market has continued to rise. The report also notes that this forecast is a scenario projection, and Bitcoin still faces multiple risks such as regulation and technology. The following is an edited compilation of the report's content (content has been abridged):
Bitcoin has experienced a highly volatile year. From the October 2025 high to the June 2026 low, the maximum drawdown reached 53%. But this performance is still in line with our expectations for Bitcoin's long-term returns; compared with the average maximum drawdown of over 80% in historical cycles, the magnitude of this round's decline has significantly narrowed. We believe this marks Bitcoin's maturation as an asset.
Setting aside price volatility, Bitcoin has made steady progress over the past year: the regulatory environment has continued to improve, institutional adoption has continued, and the global market size of value storage assets has continued to expand.
We expect the next decade to be Bitcoin's golden age, driven by three major factors:
- Bitcoin continues to become an institutional allocation asset, bringing stable net capital inflows over the long term;
- Against the backdrop of high sovereign debt, institutional investors increasingly need hard assets to hedge against inflation and fiat currency depreciation risks;
- Bitcoin's total supply is limited, and its supply elasticity is almost zero.
Combining the above factors, we predict that Bitcoin will become the best-performing mainstream institutional asset over the next decade, with its price reaching $1.6 million in 2036, a ten-year compound annual growth rate of 34.3%. Compared with last year's report forecast of $1.3 million in 2035 and an annualized rate of 28.3%, this forecast has been raised. The upward revision comes from the continued expansion of Bitcoin's core target market size, while our confidence in Bitcoin's long-term development path has further strengthened.
We judge that Bitcoin will maintain a low-to-moderate correlation with other major asset classes such as stocks and bonds. It will remain highly volatile, but volatility will continue the downward trend of the past 15 years. Although the effect of Bitcoin's traditional "four-year halving cycle" will gradually weaken as the investor base expands, it remains a cyclical asset and will still experience significant drawdowns.
The report predicts that the biggest long-term risks facing Bitcoin are technological disruption brought by quantum computing and AI mathematical breakthroughs, as well as risks at the regulatory and government policy levels.
Macroeconomic Assumptions
Bitcoin is essentially a macro-driven asset, and macroeconomic conditions are crucial to its long-term capital market assumptions.
Bitcoin is often regarded as "digital gold." Although it has other uses and future payment scenarios are expected to materialize, value storage is its core investment logic.
The most important macro variables are concentrated in debt, fiscal deficits, fiat currency depreciation, and changes in the US dollar's status as the global reserve currency. These directly determine institutional demand for hard assets such as gold.
We believe the direction of macro trends is relatively clear: debt levels in major countries, including the United States, will accelerate their accumulation, and the debt burden will continue to squeeze economies. As investment strategist Lyn Alden said: "This train can't be stopped."
In 2026, global sovereign bond yields rose sharply, signaling that the trend may be approaching a critical point. Without strong austerity policies backed by political support, many Western democracies have reached a point where it is difficult to turn back: high debt brings interest burdens, forming a debt flywheel that is hard to escape.
Over the next decade, facing heavy debt pressure, governments are likely to choose to depreciate their local currencies. Legendary hedge fund investor Dalio wrote in June 2025: "When national debt is high, policymakers tend to cut interest rates and depreciate the currency in which the debt is denominated. Betting on this trend will be a favorable choice."
In such an environment, hard assets like Bitcoin will become an important part of investment portfolios.
US Debt Expanding Rapidly
This year marks the 250th anniversary of the founding of the United States, but the fiscal reality is not optimistic. Regarding US debt, there are five startling facts:
- During the two hundred years from 1776 to 1976, the United States accumulated $650 billion in debt; today federal debt stands at $40.2 trillion.
- Half of US federal debt has been accumulated over the past decade.
- Spread across every US citizen, per capita debt exceeds $127,000.
- Federal debt equals 121% of GDP.
- Annual debt interest payments are $1.1 trillion, the third-largest expenditure item in the US federal budget. If all were refinanced at current market rates, annual interest would approach $1.5 trillion.
Total US federal debt, 1966-2026, $19.6 trillion in 2016, $40.2 trillion in September 2026, debt doubled over the past decade. Data source: US Treasury, statistical period January 1, 1966 to September 30, 2026
The Situation Is Still Worsening
In fiscal year 2026 (ending September), the US fiscal deficit reached $2 trillion, an increase of $218 billion year-over-year and $140 billion higher than the Congressional Budget Office's February forecast. This administration's campaign promises included cutting fiscal spending, but reality has not delivered.
In early 2025, Trump established the Department of Government Efficiency (DOGE) with the goal of cutting $2 trillion in government spending, but it quietly wrapped up in less than a year, ultimately achieving only $215 billion in cuts, just 10% of the target.
In fiscal year 2026, total US government spending hit a new high of $7.4 trillion, with the fiscal deficit at 6.2% of GDP. All of this happened during a period of strong economic growth; if the economy falls into recession, the deficit scale would be even more frightening.
Total US fiscal spending by year, fiscal years 2016-2026, $7.4 trillion in fiscal year 2026, an increase of $386 billion from the previous year. Note: The US fiscal year runs from October 1 to September 30 of the following year. Data as of September 30, 2026, source: US Treasury.
Not Just the United States
High debt burdens are a global phenomenon, and debt in developed economies with comprehensive social welfare systems continues to rise. The table below shows G10 countries' total debt, debt/GDP, annual deficit, 10-year government bond yields, and year-over-year changes.
This table is based on IMF statistics at the end of 2025, including federal, state, and local government debt, excluding intragovernmental holdings; Japan figures are IMF estimates.
Rising Demand for Hard Assets
Investors have already noticed the macro changes and are increasingly allocating to hard assets as a hedge. Since 2020, Bitcoin and gold have been the best-performing major asset classes globally.
Hard assets strengthening does not require extreme scenarios such as hyperinflation; merely continuing the post-pandemic macro environment is enough. The market has already proactively adjusted portfolios, increasing allocations to hard assets. The model in this report only assumes that existing trends continue and does not presuppose hyperinflation.
Cumulative returns and annualized returns of major asset classes from 2020-01-01 to 2026-09-30. Data source: Bloomberg, PivotalPath
Reserve Assets, Central Bank Gold Purchases, and the Changing Global Monetary Order
Another key macro trend is the weakening of the US dollar's status as the world's dominant reserve currency. This is reflected in the continued decline in the US dollar share of global central bank foreign exchange reserves and the increased gold holdings by central banks in many countries.
US dollar share of global foreign exchange reserves: 71.0% in 1999, 56.7% in June 2026, a cumulative decline of 14.3 percentage points; data source: IMF, as of 2026-06-30
In 2025, global central banks' net gold purchases reached $96 billion, a record high, four times the level of a decade ago and up 14% from 2024, and the pace is still accelerating.
At the same time, more than ten countries, including the United States, have already allocated Bitcoin reserves. Over the past year, progress in sovereign-level acceptance of Bitcoin has been slow but real:
- In November 2025, the Czech National Bank became the first central bank in Europe to purchase Bitcoin, allocating $1 million. In April 2026, the governor publicly stated that internal research showed that allocating 1% of its total portfolio of $180 billion to Bitcoin could raise overall expected returns without increasing risk, calling Bitcoin a "future asset."
- In October 2025, Luxembourg's sovereign wealth fund became the first sovereign fund in the eurozone to allocate to a Bitcoin ETF, with an allocation ratio of 1%.
- Deutsche Bank published a report proposing that both gold and Bitcoin will become components of central bank balance sheets by 2030.
Although these are all small-scale developments, they represent Bitcoin gradually entering normal discussions about central bank reserve assets, very similar to the process by which wealth institutions embraced Bitcoin five years ago.
Annual net gold purchases by global central banks (USD billions), 2010-2025, $96 billion in 2025, a 4.4-fold increase over ten years. Source: World Gold Council, Bloomberg, as of 2025-12-31.
Regulatory Environment Assumptions
The global crypto regulatory environment continues to improve. After the 2024 US election, the anti-crypto administration left office, and leadership at the SEC, OCC, CFTC, and Treasury changed. Over the past year, regulators have introduced multiple friendly policies, strengthening institutional safeguards and making it easier for institutions to allocate to crypto assets.
This trend is not limited to the United States; positive progress has also appeared in the Middle East, Hong Kong, the United Kingdom, and elsewhere. Almost all large US financial institutions have established crypto-related businesses. With deep involvement from BlackRock, JPMorgan, and Morgan Stanley, plus participation from a large number of companies and tens of millions of Americans, policy is unlikely to be completely reversed.
But 2026 regulation has not been entirely smooth. The much-anticipated Clarity Act crypto bill failed to advance in Congress, mainly because Democrats had concerns about the bill's ethics provisions. The setback of this bill shows that future regulatory risks still objectively exist.
Crypto business layouts of major global institutions, including Bank of America, BlackRock, BNY Mellon, Charles Schwab, Citi, CME, Deutsche Bank, Deutsche Börse, Fidelity, JPMorgan, Goldman Sachs, HSBC, UBS, Visa, Mastercard, and others. Data source: corporate announcements and presentation materials, as of 2026-09-30.
Bitcoin Capital Market Assumptions
Return Assumptions
We believe that over the next decade Bitcoin will be the best-performing major asset class globally, with a compound annual growth rate of 34.3%. There are three core drivers:
1) Institutional demand
Bitcoin is one of the few assets first led by retail investors. Traditional assets such as private equity and private credit were first embraced by institutions, with retail participation coming later; Bitcoin is the opposite.
There are a total of 21 million Bitcoins, 96% of which are already in circulation, mostly held by retail investors; while the vast majority of institutions currently have a 0 allocation.
According to Boston Consulting Group data, global institutional assets under management are about $147 trillion. We predict that over the next decade institutions will allocate 1-5% of their portfolios to Bitcoin, corresponding to $1.5 trillion-$7.4 trillion in potential buying. Yet Bitcoin's new annual output is only about $14 billion, and there is a huge gap between new supply and potential demand, which will be balanced by price increases.
Institutional inflows have already occurred. Less than three years after the launch of US spot Bitcoin ETPs, assets under management have reached $108 billion, with a large amount of funds coming from institutions. We expect inflows to accelerate after 2027. In 2026, several leading wealth management platforms have already launched spot Bitcoin ETF products, which will further boost capital inflows.
2) Highly limited and inelastic supply
Bitcoin's total supply is capped at 21 million coins, with 20.1 million already in circulation (95.7%). The annual inflation rate is only 0.8%; after the 2028 halving it will fall to 0.4%, and to 0.2% in 2032. By comparison, gold's annual new supply inflation is about 2%.
The key feature is that supply is completely inelastic. No matter how high demand is or how much the price rises, no more Bitcoin will be produced. Commodities such as gold and crude oil cannot achieve this. Huge institutional demand combined with rigid supply constitutes the underlying economic logic for being bullish on Bitcoin.
3) Continued rise in concerns about fiat currency debasement
Concerns about global debt, fiscal deficits, and currency depreciation are becoming increasingly widespread, and the market is looking for hard assets to hedge against fiat currency risk. Legendary investor Paul Tudor Jones proposed in "The Great Monetary Inflation": one should allocate to a basket of hard assets, "if I had to pick one bet, I would pick Bitcoin."
U.S. federal debt increased by 11.7 trillion over five years, reaching 40.2 trillion; annual interest expense is 1.1 trillion, the third-largest expenditure item in the federal budget.
Institutional demand, rigid supply, and concerns about fiat currency depreciation resonate together, and Bitcoin will benefit doubly: first, by capturing market share in store-of-value; second, by the expansion of the entire store-of-value market itself.
Valuation Model
Bitcoin valuation models are still developing, and academia has no unified standard. Bitwise adopts a total addressable market (TAM) model: estimate the future size of each market Bitcoin can penetrate, then estimate penetration rates, and combine with Bitcoin's fixed total supply to derive the price.
Bitwise Bitcoin valuation framework, divided into pessimistic, base, and optimistic scenarios
Our results are:
- Pessimistic scenario: 130,686 USD in 2036, annualized 4.6%
- Base scenario: 1,599,766 USD in 2036 (about 1.6 million USD), annualized 34.3%
- Optimistic scenario: 3,667,911 USD in 2036, annualized 46.0%
Among them, we believe the base scenario is the most likely. Compared with forecasts from other institutions: AllianceBernstein predicts breaking 1 million USD by 2033; Standard Chartered predicts breaking 500,000 by 2030; ARK Invest's optimistic scenario is about 1.2 million in 2030; Michael Saylor's Strategy predicts 21 million in 2046.
Correlation Assumptions
Over the past decade, Bitcoin's correlation with the vast majority of major asset classes has remained low.
Bitcoin's ten-year average rolling correlation with other assets
Market media often describe Bitcoin as a high-beta risk asset, highly tied to the stock market. In reality, historically Bitcoin's 90-day rolling correlation with U.S. stocks has almost never exceeded 0.5, failing to reach "highly correlated (>0.75)." The media impression comes from short-term co-movement during sharp bear market selloffs.
But in recent years, Bitcoin's correlation with U.S. stocks has slowly risen, a natural phenomenon of an asset maturing: with more traditional investors participating, correlation will rise slightly.
Bitcoin's long-term correlation with U.S. Treasuries is close to 0, mostly between -0.25 and 0.25, which is of great significance for portfolio diversification. The reasons are:
A one-time structural shift: Bitcoin is moving from a niche asset to a mainstream alternative asset, with millions of investors allocating to Bitcoin for the first time, bringing asymmetric capital inflows, unlike the two-way capital flows of mature assets. This effect will weaken in the future but will still play a role.
Different driving factors: stocks and bonds are mainly driven by economic growth, tax rates, geopolitics, and technological progress; Bitcoin is additionally affected by adoption rates, regulation, and concerns about fiat currency depreciation. Differences in driving logic lead to divergent return trajectories.
On the other hand, Bitcoin's correlation with gold continues to rise, reaching a record high of 0.58 on 2026-09-11; as the store-of-value narrative for Bitcoin spreads, this trend will continue and deepen.
Volatility Assumptions
Over the past decade, Bitcoin's volatility has continued to decline, and the volatility of volatility has also narrowed, representing reduced asset risk and a more diversified investor base. The most recent cycle's peak-to-trough drawdown was 53%, compared with historical drawdowns of over 80%, further confirming this trend.
We judge that the pace of volatility decline will halve compared with history, because major risks such as regulation, custody, and liquidity have already been largely priced in. The model takes the midpoint of current volatility and expected 2036 volatility, 27.8%, as the overall ten-year assumption; in reality, volatility will be higher in the early period and further decline later as the asset matures.
2013-2025, Bitcoin's 30-day rolling volatility, overall downward trend
Four-Year Halving Cycle Assumption
Bitcoin's history shows a four-year cycle pattern: three years of sharp gains, followed by one year of significant pullback. By the calendar, 2025 seems to have broken the cycle, with a full-year return of -6%. But by price trajectory, the cycle logic still holds: after peaking at 126,080 USD on 2025-10-06, a gain of 696%, it fell to a low of 58,717 USD by 2026-06-30, a drawdown of 53.4%.
This is the shallowest bear market drawdown in history, and if the low is confirmed, it will be a very important signal of Bitcoin moving toward an institutionalized asset.
The fundamental forces driving the four-year cycle are weakening, but the "four-year cycle" has been deeply implanted in investor psychology. We judge: the cycle effect will weaken but will not disappear entirely.
Log chart of Bitcoin's returns across bull and bear cycles, maximum drawdowns by cycle: 86%, 84%, 77%, and 53% this cycle.
Bitcoin vs. Traditional Assets: Long-Term Capital Market Assumption Comparison
Bitwise synthesizes the latest capital market assumptions from four institutions—J.P. Morgan, PGIM, BlackRock, and Vanguard—to compile ten-year expectations for major asset classes as a comparison benchmark.
Forecasts for Major Assets Over the Next Decade (2026‑2036)
Risks and Considerations
Bitcoin has a short history, high volatility, a continuously changing regulatory environment, institutional adoption that is still in its early stages, and underlying technology that was born in 2008‑2009. All of these factors make long-term forecasts inherently subject to enormous uncertainty. Main risks:
- Limited historical sample. Bitcoin only began large-scale public trading in 2010, institutional products started in 2014, and spot ETPs were not launched until 2024. There is not much data available for backtesting. Future macroeconomic conditions, regulation, and market structure may all undergo dramatic changes, and historical performance may not necessarily be repeatable.
- Regulatory and legislative risk. Global crypto-related regulations are still immature, and major shifts may occur at any time, whether favorable or unfavorable. Today's friendly regulatory environment may not continue in the future.
- Adoption by institutions, enterprises, and sovereigns is a new trend. Bitcoin was initially dominated by retail investors; the entry of institutions and governments is a relatively recent phenomenon, and there is no guarantee that the trend will continue.
- Technology and quantum computing risk. Bitcoin depends on its underlying code and requires continuous iteration. Quantum computing and mathematics breakthroughs accelerated by AI will bring cryptographic-level threats. In the future, Bitcoin may require major upgrades to switch to quantum-resistant cryptography; the upgrade process itself involves uncertainty. Even if the protocol completes the upgrade, if users' wallets do not migrate to quantum-resistant addresses, their assets will still face risks. The community has already begun related work, but there are still many unresolved issues. The development of AI will accelerate the risk of cryptographic breakthroughs.
In addition, macroeconomic conditions, trading mechanisms, self-custody security, and other factors also carry risks. This report lists only key uncertainties and does not represent an exhaustive account of all risks.
Conclusion
In just 17 years, Bitcoin has grown from a fringe niche investment into a $1.7 trillion asset that is researched and allocated by top global institutions. As more and more institutions incorporate Bitcoin into portfolios, high-quality forecasts and assumptions become especially important.
This report presents our core long-term judgments:
- 34.3% expected annualized return: over the next decade, Bitcoin may become the best-performing mainstream major asset class globally.
- Volatility declining but still the highest: volatility is lower than in history, but it remains the most volatile mainstream asset.
- Portfolio diversification value: it maintains low-to-moderate correlation with the vast majority of assets, and its correlation with gold is increasing, making it suitable for diversified allocation in institutional portfolios.
- Institutional capital inflows of $1.5 trillion‑$7.4 trillion: institutional allocations of 1‑5% of portfolios will bring enormous buying demand.
- Expanding demand for store of value: government debt, fiscal expansion, and excessive money creation continue to suppress fiat currency purchasing power, raising demand for hard assets such as gold and Bitcoin.
- Regulation has inertia: Wall Street and the broader market widely accept crypto, and existing favorable regulatory policies are difficult to completely overturn.
