Bitwise Report: Bitcoin May Be the Top-Performing Mainstream Asset Over the Next Decade

Article by Bitwise

Compiled by: Luffy, Foresight News

On October 28, crypto investment firm Bitwise released its 2023 Long-Term Capital Markets Assumptions report for Bitcoin, raising its 2036 price target to $1.6 million, implying an annualized expected return of 34.3%. The report retained last year’s valuation model but increased the target due to expansion in the addressable market driven by Bitcoin’s role as a store of value and growing institutional adoption. Despite a more than 50% drawdown over the past year, institutions have continued to accumulate Bitcoin, and volatility has gradually declined, further increasing Bitcoin’s share of the store-of-value market. The report also cautions that this projection is a scenario analysis and that Bitcoin remains exposed to multiple risks, including regulatory and technological factors. Below is an edited summary of the report (content has been condensed):

Bitcoin experienced a year of significant volatility. From its October 2025 high to its June 2026 low, the maximum drawdown reached 53%. However, this performance remains consistent with our expectations for Bitcoin’s long-term returns; compared to the historical cycle average maximum drawdown of over 80%, this decline has been notably less severe. We believe this signals Bitcoin’s maturation as an asset class.

Ignoring price volatility, Bitcoin has made steady progress over the past year: the regulatory environment has continuously improved, institutional adoption has grown, and the global market for store-of-value assets has expanded.

We anticipate that the next decade will be Bitcoin’s golden age, driven by three key factors:

• Bitcoin continues to be adopted as an institutional asset class, generating consistent net inflows of capital over the long term;
• Amid high sovereign debt levels, institutional investors are increasingly seeking hard assets to hedge against inflation and fiat currency depreciation;
• The total supply of Bitcoin is limited, with near-zero supply elasticity.

Taking all the above factors into account, we project that Bitcoin will become the top-performing mainstream institutional asset over the next decade, reaching a price of $1.6 million by 2036, with a compound annual growth rate of 34.3% over the ten-year period. This forecast represents an upward revision from last year’s projection of $1.3 million by 2035 at an annualized rate of 28.3%. The revision is driven by the continued expansion of Bitcoin’s core target market size and our heightened confidence in its long-term development trajectory.

We believe Bitcoin will maintain low to moderate correlation with other major asset classes such as stocks and bonds. It will continue to exhibit high volatility, but its volatility is expected to follow the downward trend observed over the past 15 years. Although the traditional four-year halving cycle’s impact may gradually weaken as the investor base expands, Bitcoin remains a cyclical asset and will still experience significant drawdowns.

This report predicts that Bitcoin's greatest long-term risks are technological disruption from quantum computing and AI-driven mathematical breakthroughs, as well as regulatory and government policy risks.

Bitcoin is fundamentally a macro-driven asset, and macroeconomic conditions are critical to its long-term capital market assumptions.

Bitcoin is often regarded as "digital gold." While it has other uses and potential future payment applications, its primary investment thesis remains value storage.

The most important macro variables focus on debt, fiscal deficits, fiat currency depreciation, and changes in the U.S. dollar’s status as the global reserve currency—all of which directly determine institutional demand for gold and other hard assets.

We believe the direction of macro trends is clear: the debt levels of major countries, including the United States, will accelerate, continuing to strain economies. As investment strategist Lyn Alden said: “This train has already left the station.”

In 2026, global sovereign bond yields rose sharply, signaling that the trend may be approaching a tipping point. Without strong political support for aggressive tightening policies, many Western democracies have reached a point of no return: high debt levels impose heavy interest burdens, creating an inescapable debt spiral.

Over the next decade, facing heavy debt burdens, governments are likely to devalue their currencies. Legendary hedge fund investor Ray Dalio wrote in June 2025: “When national debt is high, policymakers tend to lower interest rates and devalue the currency in which debt is denominated. Betting on this trend will likely be a favorable choice.”

In such an environment, hard assets like Bitcoin will become an important component of an investment portfolio.

U.S. debt is rapidly expanding

This year marks the 250th anniversary of the founding of the United States, but the fiscal reality is far from optimistic. Here are five startling facts about U.S. debt:

• Over the 200 years from 1776 to 1976, the U.S. accumulated a total debt of $650 billion; today, the federal debt has reached $40.2 trillion.
• Half of the U.S. federal debt has been accumulated over the past decade.
• When averaged across every American citizen, the per capita debt exceeds $127,000.
• The federal debt has reached 121% of GDP.
• Annual interest payments on the debt amount to $1.1 trillion, making it the third-largest expenditure 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: $19.6 trillion in 2016, $40.2 trillion in September 2026—debt has doubled over the past decade. Source: U.S. Department of the Treasury; period: January 1, 1966, to September 30, 2026.

The situation continues to deteriorate.

The U.S. fiscal deficit for fiscal year 2026 (ending in September) reached $2 trillion, an increase of $218 billion year-over-year and $140 billion higher than the Congressional Budget Office’s February projection. Although the current administration campaigned on reducing government spending, these promises have not been fulfilled.

In early 2025, Trump established the Department of Government Efficiency (DOGE) with the goal of cutting $2 trillion in government spending, but the initiative was quietly discontinued less than a year later, ultimately achieving only $215 billion in cuts—just 10% of the target.

In fiscal year 2026, U.S. government total spending reached a record high of $7.4 trillion, with the fiscal deficit accounting for 6.2% of GDP. This occurred during a period of strong economic growth; should the economy enter a recession, the deficit could become even more alarming.

U.S. total government expenditures by fiscal year, 2016–2026: $7.4 trillion in fiscal year 2026, an increase of $386 billion from the previous year. Note: The U.S. fiscal year runs from October 1 to September 30. Data as of September 30, 2026, source: U.S. Department of the Treasury.

It's not just the United States

High debt burdens are a global phenomenon, with advanced economies featuring well-developed social welfare systems continuing to see rising debt levels. The table below shows total debt, debt-to-GDP ratio, annual deficits, 10-year government bond yields, and year-over-year changes for G10 countries.

This table reflects IMF estimates as of the end of 2025, including federal, state, and local government debt, excluding intra-governmental holdings; Japan's figure is an IMF estimate.

Increased demand for hard assets

Investors have recognized macroeconomic shifts and are increasingly allocating to hard assets as a hedge. Since 2020, Bitcoin and gold have been the top-performing asset classes globally.

Hard assets can strengthen without requiring extreme scenarios like hyperinflation—simply continuing the post-pandemic macroeconomic environment is sufficient. Markets have already proactively adjusted their portfolios to increase allocations to hard assets. This report’s model assumes only the continuation of existing trends, without presupposing hyperinflation.

Cumulative returns and annualized returns for major asset classes from January 1, 2020, to September 30, 2026. Data source: Bloomberg, PivotalPath

Reserve assets, central bank gold purchases, and the evolution of the global monetary order

Another key macro trend is the weakening of the U.S. dollar’s status as the global dominant reserve currency, reflected in the continued decline in the dollar’s share of global central bank foreign exchange reserves and increased gold purchases by multiple central banks.

The U.S. dollar's share of global foreign exchange reserves was 71.0% in 1999 and 56.7% as of June 2026, a cumulative decline of 14.3 percentage points; source: IMF, as of June 30, 2026

In 2025, global central banks' net gold purchases reached $96 billion, a record high—four times the level of ten years ago and a 14% increase from 2024—with the pace continuing to accelerate.

Meanwhile, over ten countries, including the United States, have established Bitcoin reserves. Although progress in sovereign-level adoption of Bitcoin over the past year has been slow, it has been real and tangible:

• In November 2025, the Czech National Bank became the first central bank in Europe to purchase Bitcoin, allocating $1 million. In April 2026, its governor publicly stated that internal research showed allocating 1% of its $180 billion total portfolio to Bitcoin could increase 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 1% to a Bitcoin ETF.
• Deutsche Bank released a report suggesting that both gold and bitcoin will become components of central bank balance sheets by 2030.

Although these are all small-scale developments, they signify that Bitcoin is gradually entering the normal discourse around central bank reserve assets, much like the process by which institutional investors adopted Bitcoin five years ago.

Global central bank annual net gold purchases (in billion USD), 2010–2025, with 96 billion USD 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. Following the 2024 U.S. election, anti-crypto governments stepped down, and leadership at the SEC, OCC, CFTC, and Treasury changed. Over the past year, regulators have introduced multiple favorable policies, strengthening institutional safeguards and facilitating institutional access to crypto assets.

This trend is not limited to the United States; positive developments have also emerged in the Middle East, Hong Kong, the UK, and other regions. Nearly all major financial institutions in the U.S. have entered the crypto space. Deep involvement from BlackRock, JPMorgan Chase, and Morgan Stanley, combined with participation from numerous corporations and tens of millions of American individuals, makes it highly unlikely that policy can be fully reversed.

However, regulation in 2026 was not without challenges. The long-anticipated Clarity Act failed to advance in Congress, primarily due to Democratic concerns over the bill’s ethical provisions. This setback underscores that regulatory risks remain a tangible reality going forward.

Global institutional cryptocurrency initiatives by major organizations, including Bank of America, BlackRock, BNY Mellon, Charles Schwab, Citigroup, CME, Deutsche Bank, Deutsche Börse, Fidelity, JPMorgan Chase, Goldman Sachs, HSBC, UBS, Visa, and Mastercard. Data sources: corporate announcements and presentation materials, as of September 30, 2026.

Yield assumptions

We believe that over the next decade, Bitcoin will be the top-performing asset class globally, with a compound annual growth rate of 34.3%. This is driven by three key factors:

1) Institutional demand

Bitcoin is one of the few assets initially dominated by retail investors. In contrast to traditional assets like private equity and private credit, which were first adopted by institutions before retail participation, Bitcoin followed the opposite path.

There are a total of 21 million bitcoins, 96% of which are already in circulation, mostly held by retail investors; meanwhile, the vast majority of institutions currently hold 0%.

According to Boston Consulting Group data, global institutional assets under management total approximately $147 trillion. We project that over the next decade, institutions will allocate 1–5% of their portfolios to Bitcoin, representing potential buying demand of $1.5 trillion to $7.4 trillion. Meanwhile, Bitcoin’s annual new supply amounts to only about $14 billion, creating a significant gap between new supply and potential demand—which will be balanced by price appreciation.

Institutional inflows have already occurred. Within less than three years of the launch of U.S. spot Bitcoin ETFs, assets under management have reached $108 billion, with substantial capital coming from institutions. We expect inflows to accelerate after 2027. Several leading wealth management platforms are set to launch spot Bitcoin ETF products in 2026, further driving capital inflows.

2) Supply is extremely limited and inelastic

The total supply of Bitcoin is capped at 21 million coins, with 20.1 million currently in circulation (95.7%). The annual inflation rate is only 0.8%; it will drop to 0.4% after the next halving in 2028 and to 0.2% by 2032. For comparison, the annual inflation rate of newly mined gold is approximately 2%.

The key feature is perfectly inelastic supply: no matter how high demand rises or how much the price increases, no additional bitcoins can be produced. Commodities like gold and crude oil cannot achieve this. The combination of massive institutional demand and rigid supply forms the fundamental economic logic behind a bullish outlook on Bitcoin.

3) Concerns about fiat currency depreciation continue to rise

Concerns over global debt, fiscal deficits, and currency depreciation are becoming increasingly common, as markets seek hard assets to hedge against fiat currency risk. Legendary investor Paul Tudor Jones, in his article "The Great Monetary Inflation," proposed allocating a basket of hard assets: "If I had to pick just one bet, I would choose Bitcoin."

The U.S. federal debt increased by $11.7 trillion over five years to reach $40.2 trillion; annual interest payments amount to $1.1 trillion, making it the third-largest expenditure in the federal budget.

The convergence of institutional demand, rigid supply, and concerns over fiat currency depreciation will benefit Bitcoin doubly: first, by capturing market share in value storage, and second, by driving the overall expansion of the value storage market.

Valuation model

Bitcoin valuation models are still evolving, and there is no industry-wide consensus. Bitwise employs a Total Addressable Market (TAM) model: estimating the future scale of various markets Bitcoin could enter, projecting adoption rates, and combining these with Bitcoin’s fixed supply to calculate its price.

Bitwise Bitcoin Valuation Framework, with three scenarios: bearish, base, and bullish

Our results show that:

• Pessimistic scenario: $130,686 in 2036, with an annualized return of 4.6%
• Base case: $1,599,766 (approximately $1.6 million) in 2036, with an annualized return of 34.3%.
• Bullish scenario: $3,667,911 in 2036, with an annualized return of 46.0%

Among these, we believe the base case is the most likely. In comparison, other institutions predict: AllianceBernstein forecasts Bitcoin exceeding $1 million by 2033; Standard Chartered predicts it will surpass $500,000 by 2030; Ark Invest’s optimistic scenario estimates around $1.2 million by 2030; and Michael Saylor’s Strategy forecasts $21 million by 2046.

Relevance assumption

Over the past decade, Bitcoin has maintained low correlation with the vast majority of major asset classes.

Ten-year rolling average correlation of Bitcoin with other assets

Market media often describe Bitcoin as a high-beta risk asset with strong ties to the stock market. However, historically, Bitcoin’s 90-day rolling correlation with U.S. equities has rarely exceeded 0.5, falling short of the threshold for “strong correlation (>0.75).” This perception stems from short-term联动 during bear market sell-offs.

In recent years, the correlation between Bitcoin and the U.S. stock market has gradually increased, which is a natural phenomenon as assets mature: greater participation from traditional investors leads to a modest rise in correlation.

Bitcoin and U.S. Treasuries have had a long-term correlation close to zero, typically ranging between -0.25 and 0.25 for most periods, which is significant for portfolio diversification. The reasons are:

A one-time structural shift: Bitcoin is transitioning from a niche asset to a mainstream alternative asset, with millions of investors allocating to Bitcoin for the first time, generating asymmetric capital inflows that differ from the two-way capital flows seen in mature assets. This effect will weaken over time but will continue to play a role.

Different drivers: Stocks and bonds are primarily driven by economic growth, tax rates, geopolitics, and technological advancement; Bitcoin is additionally influenced by adoption rates, regulation, and concerns about fiat currency depreciation. These differing drivers lead to divergent return patterns.

On the other hand, the correlation between Bitcoin and gold has continued to rise, reaching a historic high of 0.58 on September 11, 2026; this trend is expected to persist and deepen as Bitcoin’s narrative as a store of value gains wider adoption.

Volatility assumption

Over the past decade, Bitcoin's volatility has consistently declined, and the variability of its volatility has also narrowed, indicating reduced asset risk and a more diversified investor base. The recent cycle's peak drawdown of 53% further confirms this trend, compared to historical drawdowns exceeding 80%.

We expect the rate of decline in volatility to be halved compared to historical trends, as major risks such as regulation, custody, and liquidity have largely been priced in. The model uses the midpoint between current volatility and the expected volatility in 2036—27.8%—as the overall assumption over the decade; in reality, volatility will be higher in the early stages and decline further as the asset matures.

From 2013 to 2025, Bitcoin's 30-day rolling volatility shows an overall downward trend.

Four-year halving cycle assumption

Bitcoin's history exhibits a four-year cycle: three years of significant gains followed by one year of sharp correction. Calendar-wise, 2025 appears to break the cycle with an annual return of -6%. However, examining the price trajectory, the cycle logic still holds: on October 6, 2025, Bitcoin reached a peak of $126,080, surging 696%, before declining to a low of $58,717 by June 30, 2026, a retracement of 53.4%.

This has been the least severe drawdown in history; if the low is confirmed, it will be a significant signal of Bitcoin's path toward becoming an institutional asset.

The fundamental forces driving the four-year cycle are weakening, but the "four-year cycle" has become deeply embedded in investors' psychology. We believe: the cycle effect will diminish, but not disappear entirely.

Logarithmic chart of returns for each Bitcoin bull and bear cycle, with maximum drawdowns of 86%, 84%, 77%, and 53% for this cycle.

Bitwise has compiled a ten-year expected return benchmark for major asset classes, based on the latest capital market assumptions from JPMorgan, PGIM, BlackRock, and Vanguard.

Asset forecasts for the next decade (2026–2036)

Bitcoin has a relatively short history, high volatility, a continuously evolving regulatory environment, and institutional adoption still in its early stages, with its underlying technology originating in 2008–2009. All these factors make long-term predictions inherently highly uncertain. Key risks:

• Historical data is limited. Bitcoin only began large-scale public trading in 2010, institutional products emerged in 2014, and spot ETPs were not launched until 2024. As a result, there is limited data available for backtesting. Future macroeconomic conditions, regulations, and market structures could change dramatically, meaning past performance may not be indicative of future results.
• Regulatory and legislative risks. Global regulations related to cryptocurrencies are still immature and could undergo significant shifts at any time, potentially bringing either positive or negative impacts. A favorable regulatory environment today may not necessarily continue in the future.
• Institutional, corporate, and sovereign adoption represents a new trend. Bitcoin was initially dominated by retail investors; participation by institutions and governments is a relatively recent phenomenon and cannot be guaranteed to continue.
• Technology and quantum computing risks. Bitcoin relies on its underlying code, which requires continuous iteration. Quantum computing and AI-accelerated mathematical breakthroughs could pose cryptographic threats. In the future, Bitcoin may require significant upgrades to transition to quantum-resistant cryptography; the upgrade process itself carries uncertainty. Even if the protocol is successfully upgraded, assets remain at risk if users do not migrate their wallets to quantum-resistant addresses. The community is already working on these issues, but many challenges remain. The advancement of AI will accelerate the risk of cryptographic breakthroughs.

In addition, risks also exist in the macro environment, trading mechanisms, and self-custody security. This report highlights key uncertainties but does not encompass all potential risks.

In just 17 years, Bitcoin has evolved from a niche, fringe investment into a $1.7 trillion asset class, studied and allocated by top global institutions. As more institutions incorporate Bitcoin into their portfolios, high-quality forecasts and assumptions have become increasingly critical.

This report presents our core long-term assessment:

• 34.3% expected annualized return: Bitcoin could become the best-performing mainstream asset class globally over the next decade.
• Volatility has declined but remains the highest: Volatility has decreased compared to historical levels, yet it is still the highest among major assets.
• Diversification Value: Maintains low to moderate correlation with the majority of assets, while exhibiting increased correlation with gold, making it suitable for institutional portfolio diversification.
• Institutional inflows of $1.5 trillion to $7.4 trillion: Institutional allocation of 1% to 5% of their portfolios generates massive buying pressure.
• Expansion of demand for value storage: Government debt, fiscal expansion, and monetary overissue continue to erode the purchasing power of fiat currencies, increasing demand for hard assets such as gold and Bitcoin.
• Regulation has inertia: Wall Street and mainstream markets have widely adopted crypto, making it difficult to fully reverse existing regulatory favorable policies.