Bitwise Report: Bitcoin Could Become the Best-Performing Major Asset Over the Next Decade
Author: Bitwise
Compiled by: Luffy, Foresight News
On October 28, crypto investment firm Bitwise released its annual long-term capital market assumptions report for Bitcoin, raising its 2036 target price to $1.6 million, corresponding to an expected annualized return of 34.3%. The report retains last year's valuation model and raises the target due to the expansion of the addressable market in areas such as store-of-value and institutional investment. Despite Bitcoin experiencing a drawdown of over 50% in the past year, institutional investors have increased their positions against the trend, volatility has gradually converged, and Bitcoin's market share within the store-of-value segment continues to rise. The report also cautions that this forecast is based on scenario analysis, and Bitcoin still faces multiple risks, including regulatory and technological ones. Below is an edited compilation of the report content (some content has been omitted):
Bitcoin endured a highly volatile year. From the high in October 2025 to the low in June 2026, the maximum drawdown reached 53%. However, this performance still aligns with our expectations for Bitcoin's long-term returns; compared to the historical average maximum drawdown of over 80%, this downturn represents a significant narrowing. We believe this marks Bitcoin's evolution into a more mature asset class.
Setting aside price volatility, Bitcoin has made steady progress over the past year: the regulatory environment continues to improve, institutional adoption persists, and the global market size for store-of-value assets continues to expand.
We anticipate that the next decade will be Bitcoin's golden age, driven by three key factors:
Bitcoin's continued integration as an institutional portfolio asset, generating sustained net capital inflows over the long term;
In the context of soaring sovereign debt, institutional investors increasingly require hard assets to hedge against inflation and fiat currency devaluation risks;
Limited total supply of Bitcoin with nearly zero supply elasticity.
Synthesizing these factors, we project that Bitcoin will emerge as the top-performing mainstream institutional asset over the next decade, reaching $1.6 million by 2036, with a ten-year compound annual growth rate (CAGR) of 34.3%. This forecast represents an upward revision from last year's report, which predicted $1.3 million by 2035 at a 28.3% annualized return. The revision stems from the continuous expansion of Bitcoin's core addressable market sizes, alongside our reinforced confidence in its long-term developmental trajectory.
We expect Bitcoin to maintain a low-to-moderate correlation with other major asset classes such as equities and fixed income. While it will retain high volatility, volatility levels will continue their downward trend observed over the past 15 years. As the investor base expands, the effect of Bitcoin's traditional four-year halving cycle will gradually weaken, but it remains a cyclical asset prone to significant drawdowns.
This report identifies the primary long-term risks facing Bitcoin as technological disruption stemming from quantum computing and AI-driven mathematical breakthroughs, along with regulatory and government policy risks.
Macroeconomic Assumptions
Bitcoin is fundamentally a macro-driven asset, making macroeconomic conditions critical to its long-term capital market assumptions.
Bitcoin is frequently characterized as "digital gold." Although it serves other functions and payment use cases may materialize in the future, store-of-value remains its core investment thesis.
The most significant macro variables center on debt levels, fiscal deficits, fiat currency depreciation, and shifts in the U.S. dollar's status as the world's primary reserve currency, all of which directly dictate institutional demand for gold-like hard assets.
The direction of macro trends appears clear: debt levels across major economies, including the United States, will accelerate, with debt burdens continually straining economic systems. As investment strategist Lyn Alden noted: "This train cannot be stopped."
Surging global sovereign bond yields in 2026 signal that this trend may be approaching a tipping point. Under strong monetary tightening lacking political support, many Western democracies have reached a point of no return: high debt creates interest obligations, forming an inescapable debt flywheel.
Over the next decade, facing mounting debt pressures, governments will likely opt for currency depreciation. Legendary hedge fund manager Ray Dalio wrote in June 2025: "When national debt is high, policymakers tend to cut rates and depreciate the currency in which debt is denominated. Betting on this trend would be the favorable choice."
In such an environment, hard assets like Bitcoin will become a crucial component of investment portfolios.
Rapid Expansion of U.S. Debt
This year marks the 250th anniversary of the founding of the United States, yet the fiscal reality is far from optimistic. Five alarming facts regarding U.S. debt stand out:
Over the two centuries from 1776 to 1976, cumulative U.S. debt totaled $650 billion; today, federal debt stands at $40.2 trillion.
Half of all federal debt was accumulated in the past decade.
Averaged per U.S. citizen, individual debt exceeds $127,000.
Federal debt reaches 121% of GDP.
Annual interest payments amount to $1.1 trillion, ranking as the third-largest expenditure item in the U.S. federal budget. If refinanced entirely at current market rates, annual interest would approach $1.5 trillion.
Total U.S. Federal Debt, 1966‑2026. At $19.6 trillion in 2016 and $40.2 trillion in September 2026, debt levels have doubled over the past decade. Source: U.S. Department of the Treasury, statistical period January 1, 1966 to September 30, 2026.
The Situation Continues to Deteriorate
For the 2026 fiscal year (through September), the U.S. fiscal deficit reached $2 trillion, an increase of $218 billion year-over-year, exceeding the Congressional Budget Office's February forecast by $140 billion. While the current administration's campaign promises included reducing fiscal spending, reality has not matched those commitments.
In early 2025, former President Trump established the Department of Government Efficiency (DOGE) with the goal of cutting $2 trillion in government spending. However, the initiative quietly concluded in less than a year, achieving only $215 billion in cuts—just 10% of the target.
In the 2026 fiscal year, U.S. government total spending hit a record $7.4 trillion, with the fiscal deficit accounting for 6.2% of GDP. All of this occurred during a phase of robust economic growth; should the economy slip into recession, the deficit picture would become even more severe.
Total U.S. Fiscal Expenditure by Year, FY 2016‑2026. At $7.4 trillion in FY 2026, an increase of $386 billion from the previous year. Note: The U.S. fiscal year runs from October 1 to September 30 of the following year. Data as of September 30, 2026. Source: U.S. Department of the Treasury.
Not Limited to the U.S.
High debt burdens are a global phenomenon, with developed economies featuring extensive social welfare systems seeing debt levels persistently climb. The table below outlines total debt, debt-to-GDP ratios, annual deficits, 10-year government bond yields, and year-over-year changes for G10 countries.
Table based on IMF year-end 2025 statistics. Includes federal, state, and local government debt, excluding intra-governmental holdings; Japan figures are IMF estimates.
Rising Demand for Hard Assets
Investors have recognized the macroeconomic shifts, increasingly allocating to hard assets as hedges. Since 2020, Bitcoin and gold have been the top-performing major asset classes globally.
Strength in hard assets does not require extreme scenarios like hyperinflation; merely continuing the post-pandemic macroeconomic environment suffices. Markets have already proactively adjusted portfolios to overweight hard assets. Our model simply assumes existing trends continue, without presupposing hyperinflation.
Cumulative Returns and Annualized Performance of Major Asset Classes from January 1, 2020 to September 30, 2026. Data Sources: Bloomberg, PivotalPath.
Reserve Assets, Central Bank Gold Purchases, and Shifts in the Global Monetary Order
Another key macroeconomic trend is the gradual weakening of the U.S. dollar's dominant position as the global reserve currency. This is reflected in the declining share of U.S. dollars in global central bank foreign exchange reserves, with numerous central banks increasing their gold holdings.
Share of U.S. Dollars in Global Foreign Exchange Reserves: 71.0% in 1999, down to 56.7% in June 2026, a cumulative decline of 14.3 percentage points. Data Source: IMF, as of June 30, 2026.
Global central bank net gold purchases reached $96 billion in 2025, setting a new record—a volume four times higher than a decade ago and up 14% from 2024, with the pace accelerating further.
Meanwhile, more than ten countries, including the United States, have allocated Bitcoin to their reserves. Progress in sovereign-level acceptance of Bitcoin has been slow over the past year, but it is undeniably happening:
In November 2025, the Czech National Bank became the first European central bank to purchase Bitcoin, allocating $1 million. In April 2026, the governor publicly stated that internal research shows allocating 1% Bitcoin to their total $180 billion portfolio could enhance overall expected returns without increasing risk, describing Bitcoin as a "future asset."
In October 2025, Luxembourg's sovereign wealth fund became the first Eurozone sovereign fund to allocate to a Bitcoin ETF, with a 1% allocation.
Deutsche Bank published a report projecting that both gold and Bitcoin will become components of central bank balance sheets by 2030.
While these represent modest initial steps, they signal Bitcoin's gradual entry into mainstream discussions regarding central bank reserve assets, mirroring how wealth management institutions accepted Bitcoin five years ago.
Global Central Bank Annual Net Gold Purchases (USD Billions), 2010‑2025. Reaching $96 billion in 2025, a 4.4x increase over the decade. Source: World Gold Council, Bloomberg, as of December 31, 2025.
Regulatory Environment Assumptions
The global cryptocurrency regulatory environment continues to improve. Following the 2024 U.S. election, anti-crypto administrations stepped down, leading to leadership transitions at the SEC, OCC, CFTC, and Treasury Department. Over the past year, regulators have introduced numerous friendly policies, strengthening institutional safeguards to facilitate institutional allocation of crypto assets.
This trend extends beyond the United States, with positive developments emerging in the Middle East, Hong Kong, the UK, and elsewhere. Almost all major U.S. financial institutions have now laid out their crypto-related business strategies. With BlackRock, JPMorgan Chase, and Morgan Stanley deeply involved, alongside widespread corporate participation and millions of individual U.S. residents engaged, it becomes highly unlikely that policy will fully reverse.
However, 2026 regulatory progress was not without setbacks. The highly anticipated Cryptocurrency Clarity Act failed to advance in Congress, primarily due to Democratic concerns over certain ethical provisions. The legislation's stall confirms that regulatory risks remain objectively present in the future.
Global Top-Tier Institutional Crypto Business Layouts, including Bank of America, BlackRock, BNY Mellon, Charles Schwab, Citibank, CME, Deutsche Bank, Deutsche Börse, Fidelity, JPMorgan Chase, Goldman Sachs, HSBC, UBS, Visa, Mastercard, and others. Data sources: Corporate announcements and presentation materials, as of September 30, 2026.
Bitcoin Capital Market Assumptions
Return Assumptions
We believe Bitcoin will be the best-performing major asset class globally over the next decade, achieving a compound annual growth rate of 34.3%. Three core drivers underpin this projection:
1) Institutional Demand
Bitcoin is a rare asset initially dominated by retail investors. Traditional assets such as private equity and private credit were first adopted by institutions before retail participation; Bitcoin follows the exact opposite trajectory.
Out of Bitcoin's total 21 million coins, 96% is already in circulation, predominantly held by retail investors, while the current allocation by the vast majority of institutions stands at 0.
According to Boston Consulting Group data, global institutional managed assets total approximately $147 trillion. We project that over the next decade, institutions will allocate 1%‑5% of their portfolios to Bitcoin, representing potential buying power of $1.5 trillion to $7.4 trillion. Meanwhile, Bitcoin's annual new issuance amounts to only roughly $14 billion. The massive gap between incremental supply and potential demand will be balanced by price appreciation.
Institutional inflows have already begun. U.S. Bitcoin spot ETPs have been live for less than three years, boasting assets under management of $108 billion, with substantial capital originating from institutions. We anticipate accelerated inflows post-2027. Several top-tier wealth management platforms launched spot Bitcoin ETF products in 2026, which will further catalyze capital inflows.
2) Highly Constrained and Inelastic Supply
Bitcoin's total supply cap is 21 million coins, with 20.1 million currently circulating (95.7%). The annual inflation rate stands at only 0.8%; following the 2028 halving, it will drop to 0.4%, and fall to 0.2% by 2032. By comparison, the annual supply inflation rate for gold is approximately 2%.
The defining feature is completely inelastic supply. No matter how high demand rises or prices climb, no additional Bitcoin will be produced. Commodities like gold and crude oil cannot offer this characteristic. Immense institutional demand layered upon rigid supply forms the foundational economic logic behind bullish Bitcoin projections.
3) Persisting Concerns Over Fiat Currency Devaluation
Growing global anxieties surrounding debt, fiscal deficits, and currency depreciation are prompting markets to seek hard assets as hedges against fiat risks. Legendary investor Paul Tudor Jones argued in his piece on "The Great Monetary Inflation": when constructing a basket of hard assets, "If forced to choose one bet, I would select Bitcoin."
U.S. federal debt has grown by $11.7 trillion over five years, reaching $40.2 trillion; annual interest expenditures hit $1.1 trillion, ranking as the third-largest line item in the federal budget.
The convergence of institutional demand, rigid supply, and fiat devaluation fears positions Bitcoin to benefit doubly: capturing market share in the store-of-value segment, and riding the overall expansion of the store-of-value market itself.
Valuation Model
Bitcoin valuation models are still evolving, lacking academic consensus. Bitwise utilizes a Total Addressable Market (TAM) model: estimating the future scale of various markets Bitcoin can penetrate, forecasting market penetration rates, and deriving prices by combining these figures with Bitcoin's fixed total supply.
Bitwise Bitcoin Valuation Framework, categorizing bear, base, and bull scenarios.
Our derived results are:
Bear Scenario: $130,686 by 2036, 4.6% annualized
Base Scenario: $1,599,766 by 2036 (~$1.6 million), 34.3% annualized
Bull Scenario: $3,667,911 by 2036, 46.0% annualized
Among these, we consider the Base Scenario most probable. For comparison, other institutional forecasts include: Allianz expecting a breakout past $1 million by 2033; Standard Chartered predicting a surge beyond $500,000 by 2030; ARK Investment's Bull Case projecting ~$1.2 million by 2030; and Michael Saylor's Strategy treasury strategy forecasting $2.1 million by 2046.
Correlation Assumptions
Over the past decade, Bitcoin's correlation with the vast majority of major asset classes has remained at low levels.
Average 10-Year Rolling Correlation of Bitcoin with Other Assets.
Market media frequently characterizes Bitcoin as a high-beta risk asset tightly bound to stock markets. Historically, however, Bitcoin's 90-day rolling correlation with U.S. equities has almost never exceeded 0.5, falling short of the threshold for "highly correlated (>0.75)." This perception stems from short-term co-movements during severe bear market crashes.
In recent years, Bitcoin's correlation with U.S. equities has slowly risen, which is a natural phenomenon as the asset matures: increased participation from traditional investors leads to slight correlation upticks.
Bitcoin's long-term correlation with U.S. Treasuries hovers near 0, spending the vast majority of time between -0.25 and 0.25, which is highly significant for portfolio diversification. This occurs due to:
One-off structural shift: As Bitcoin transitions from a niche asset to a mainstream alternative, millions of investors are purchasing it for the first time, generating asymmetric capital inflows that differ from the bidirectional flows typical of mature assets. This effect will diminish over time but remains influential.
Divergent drivers: Equities and bonds are primarily driven by economic growth, tax rates, geopolitical factors, and technological advancements. Bitcoin is additionally influenced by adoption rates, regulatory developments, and fiat depreciation concerns. These differing fundamental logics create divergent return trajectories.
Conversely, Bitcoin's correlation with gold has been consistently climbing, hitting an all-time high of 0.58 on September 11, 2026. As the store-of-value narrative gains broader traction, this trend is expected to continue and deepen.
Volatility Assumptions
Bitcoin's volatility has continuously declined over the past decade, with the amplitude of volatility swings also narrowing, indicating decreasing asset risk and a more diversified investor base. The latest cycle peak saw a 53% drawdown, contrasting sharply with historical drawdowns exceeding 80%, further validating this trend.
We anticipate the rate of volatility decline will decelerate relative to historical patterns, as major risks concerning regulation, custody, and liquidity have largely been priced in. The model adopts a midpoint of 27.8% between current and projected 2036 volatility as the ten-year baseline assumption; in practice, volatility will be higher in the early years and gradually subside further as the asset matures.
Bitcoin 30-Day Rolling Volatility from 2013‑2025, demonstrating a consistent downward trend.
Four-Year Halving Cycle Assumptions
Bitcoin's history exhibits four-year cyclical characteristics: three years of sharp rallies followed by one year of significant corrections. Calendar-wise, 2025 appeared to break the pattern with an annual return of -6%. However, viewing the price trajectory confirms the cyclical logic remains intact: after peaking at $126,080 on October 6, 2025 following a 696% surge, Bitcoin fell to a low of $58,717 by June 30, 2026, registering a 53.4% drawdown.
This represents the shallowest bear market drawdown in history. If this low point holds, it will serve as a crucial signal confirming Bitcoin's transition toward an institutionalized asset class.
The fundamental forces driving the four-year cycle are gradually weakening, yet the "four-year cycle" concept is deeply embedded in investor psychology. We project that the cyclical effect will diminish but not disappear entirely.
Logarithmic Return Chart Across Bitcoin Bull/Bear Cycles, with maximum drawdowns per cycle: 86%, 84%, 77%, and 53% in the current cycle.
Bitcoin vs. Traditional Assets: Comparison of Long-Term Capital Market Assumptions
Bitwise synthesizes the latest capital market assumptions from JPMorgan, PGIM, BlackRock, and Vanguard, compiling ten-year expectations for major asset classes to establish a comparative benchmark.
Predictions for Major Assets Over the Next Decade (2026‑2036).
Risks and Caveats
Bitcoin possesses a relatively short history, high volatility, a continuously evolving regulatory landscape, and early-stage institutional adoption, with underlying technology dating back to 2008‑2009. All these factors inherently inject significant uncertainty into long-term forecasts. Key risks include:
Limited historical sample. Bitcoin did not begin large-scale public trading until 2010, institutional products emerged starting in 2014, and spot ETPs only launched in 2024. Backtestable data remains scarce. Future macroeconomic conditions, regulatory frameworks, and market structures could undergo radical shifts, meaning historical performance may not be replicable.
Regulatory and legislative risks. Global cryptocurrency regulations remain immature and subject to sudden, dramatic reversals that could trigger either favorable or adverse outcomes. The currently friendly regulatory climate is not guaranteed to persist.
Adoption by institutions, corporations, and sovereign entities represents a nascent trend. Originally retail-driven, institutional and governmental entry is a relatively new development, and this trajectory cannot be assured of continuation.
Technological and quantum computing risks. Bitcoin relies on foundational code requiring continuous iteration. Mathematical breakthroughs accelerated by quantum computing and AI pose cryptographic threats. Future upgrades may be necessary to transition to quantum-resistant cryptography; the upgrade process itself carries uncertainties. Even if protocol-level upgrades occur, assets remain vulnerable if user wallets do not migrate to quantum-resistant addresses. While the community has initiated relevant work, numerous unresolved challenges remain. AI advancement will further expedite cryptanalytic breakthrough risks.
Beyond these, risks related to macroeconomic environments, trading mechanisms, self-custody security, and other factors also exist. This report highlights key uncertainties but does not purport to list every possible risk.
Conclusion
In just 17 years, Bitcoin has evolved from a peripheral, niche investment into a $1.7 trillion asset analyzed and allocated by the world's premier institutions. As more institutions integrate Bitcoin into their portfolios, high-quality forecasting and assumptions grow increasingly critical.
This report presents our core long-term conclusions:
34.3% Expected Annualized Return: Bitcoin may emerge as the top-performing mainstream major asset class over the next decade.
Declining Yet Highest Volatility: Volatility has decreased historically but remains the highest among mainstream assets.
Portfolio Diversification Value: Maintains low-to-moderate correlation with the vast majority of assets while correlating more strongly with gold, making it suitable for institutional portfolio diversification.
$1.5T‑$7.4T Institutional Capital Inflows: Institutional allocations representing 1‑5% of portfolio weights will generate massive buying pressure.
Expanding Store-of-Value Demand: Persistent government debt, fiscal expansion, and monetary overissuance continue to suppress fiat purchasing power, elevating demand for hard assets like gold and Bitcoin.
Regulatory Inertia: Widespread acceptance of cryptocurrency by Wall Street and mainstream markets makes it highly difficult to fully reverse existing pro-crypto regulatory policies.