In a scenario where financial markets are seeking resilient assets, Bitwise, a firm specializing in cryptocurrency investments, projects a promising future for Bitcoin (BTC).
In its August 21 report , the firm details the factors it believes will drive the digital currency's growth and anticipates a price of $1.3 billion by 2035, with a compound annual growth rate of 28.3%.
Bitcoin price projection to 2035. Source: Bitwise.
Bitwise attributes this projection to three main factors. First, Bitcoin is consolidating its position as an institutional asset, which will generate steady capital flows. Second, institutional investors are increasingly seeking "hard" assets as a hedge against inflation.
Finally, Bitcoin's limited supply, with only 21 million total units, reinforces its value in the face of growing demand. However, the firm warns that this upward trend will be accompanied by significant volatility, albeit less than historically observed.
Institutional adoption of Bitcoin will grow in the future.
The report highlights that institutional investors, who manage approximately $100 trillion in assets according to the World Bank, could allocate between 1% and 5% of their portfolios to Bitcoin over the next decade.
This would involve an investment of between $1 and $5 trillion. Currently, Bitcoin investment products already handle $170 billion, but Bitwise considers this just the beginning.
Buying pressure from these institutions, combined with the shortage of new Bitcoin, about $18 billion annually at current prices will drive prices higher.
Unlike other emerging assets, such as private equity or credit, Bitcoin was initially embraced by retail investors. Today, nearly 95% of existing Bitcoin is owned by these investors, while most institutional investors still have no exposure.
This dynamic, coupled with strict supply constraints, creates a scenario of high demand versus limited availability, according to Bitwise.
There are risks to the price of Bitcoin.
Despite this optimism, Bitwise acknowledges risks that could dampen its outlook. The main ones are regulatory and legislative changes resulting from unpredictable political environments.
Furthermore, BTC, as a relatively new asset, lacks a long track record, which introduces uncertainty. Although less concerning, the firm mentions the theoretical risk of quantum computing, which could compromise Bitcoin's cryptography. However, current technical limitations minimize this threat.
Bitwise acknowledges that models for predicting Bitcoin's performance are imperfect and evolve with limited data. Therefore, it takes a conservative approach to its estimates, considering the asset's novelty and volatility.
Furthermore, the firm notes that the halving, an event that halves the Bitcoin issuance every four years, has "lost relevance," although the market will continue to face significant setbacks.
Other projections for bitcoin
Bernstein, for its part, predicts that Bitcoin will reach between $150,000 and $200,000 in 2026, $500,000 in 2029, and $1 million in 2033, with bullish cycles interrupted by bearish periods.
Michael Saylor, president of Strategy, projects a price tag of $21 million over 21 years. These estimates reinforce the perception of sustained, albeit fluctuating, growth as predicted by Bitwise.
The firm highlights that Bitcoin maintains low correlations with stocks, bonds, and other asset classes, making it an attractive option for diversifying portfolios. Its combination of scarcity, initial retail adoption, and growing institutional interest positions it as a unique asset in the financial landscape. The firm concludes that, despite the risks, Bitcoin is on track to be the best-performing institutional asset over the next decade.
