- Bitwise CIO projects Bitcoin reaching $1.3 million by 2035 with the base case model.
- Twelve major institutions requested long-term capital market assumptions for Bitcoin.
- Bitcoin shows a 0.21 correlation to equities with projected 28% annual returns ahead.
Bitwise Chief Investment Officer Matt Hougan presented long-term capital market assumptions for Bitcoin, projecting a price target of $1.3 million by 2035. The presentation addressed institutional investors seeking quantitative frameworks for Bitcoin allocation decisions.
Hougan stated that 12 major institutional platforms with trillions in assets requested these capital market assumptions in the past year. This is a shift from zero requests in prior years through 2024. The institutions include national account platforms, financial advisor groups with thousands of advisors, and investment committees evaluating Bitcoin exposure.
Bitcoin Valuation Model Based on the Gold Market
The Bitwise valuation model projects Bitcoin growing from 9% of gold’s market capitalization to 25% by 2035. Hougan emphasized that gold’s market expanded from $2.5 trillion when gold ETFs launched in 2004 to $27 trillion currently. Bitcoin stood at $2 trillion when spot ETFs launched.
If Bitcoin maintains its current 8% proportion of the gold market while gold continues historical growth rates, the token would reach seven-figure valuations without requiring extreme assumptions. The base case scenario assumes Bitcoin captures a quarter of gold’s value rather than matching it entirely.
Harvard University positioned Bitcoin as a debasement hedge by purchasing nearly $500 million in Bitcoin and around $250 million in gold, establishing a 2:1 ratio favoring cryptocurrency. This allocation shows institutional recognition of Bitcoin’s role in portfolio construction during periods of currency concern.
Hougan Speaks About Bitcoin Correlation to Equities
Bitcoin’s correlation to equities stands at approximately 0.21 on a 30-day rolling basis over the past decade. Correlations between 0 and 0.5 represent low correlation, meaning assets don’t move together. Bitcoin has never sustained a correlation above 0.5 except briefly during the COVID stimulus, when all asset correlations increased temporarily.
The projected long-term correlation will rise to 0.36 as central bank policy increasingly affects all asset classes. However, this remains below 0.5, indicating a low correlation. Bitcoin shows zero correlation with bonds and a very low correlation with commodities.
Bitwise projects Bitcoin will deliver 28% annualized returns over the next decade compared to the Wall Street consensus of 6% for stocks and 5% for bonds. Only private equity projects deliver double-digit returns at 10% annually among traditional assets.
Volatility has declined steadily since 2012, as measured by 30-day rolling averages. Hougan compared this pattern to gold’s decline in volatility over 20 years following the end of the gold standard. Bitcoin volatility is projected to continue falling but at half the historical rate, reaching approximately 33% compared to 26% for private equity.
Related: Saylor ‘Walks the Walk’ on Bitcoin-Backed Banking Pitch; Treasury Swells to 660,624 BTC
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