Bitwise Report: Bitcoin May Be the Best-Performing Major Asset of the Next Decade

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 Bitcoin price target to $1.6 million, implying an expected annualized return of 34.3%. The report uses the same valuation model as last year, raising the target because the addressable market for store-of-value and institutional investment has expanded. Although Bitcoin has fallen more than 50% over the past year, institutions have added positions against the trend and volatility has gradually converged, while Bitcoin's share of the store-of-value market has continued to rise. The report also notes that this forecast is a scenario analysis and that Bitcoin still faces multiple risks, including regulatory and technological risks. The following is an edited summary of the report (content has been condensed):

Bitcoin has experienced a highly volatile year. From the October 2025 high to the June 2026 low, the maximum drawdown reached 53%. Yet this performance still aligns with our expectations for Bitcoin's long-term returns; compared with an average maximum drawdown of more than 80% in prior cycles, this decline has been significantly smaller. We believe this marks Bitcoin's maturation as an asset.

Beyond 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 store-of-value asset market has continued to expand.

We expect the next decade to be a golden age for Bitcoin, driven by three key factors:

• Bitcoin continues to be adopted as an institutional allocation asset, generating stable net inflows over the long term;
• Against a backdrop of elevated sovereign debt, institutional investors increasingly need hard assets to hedge against inflation and fiat currency debasement;
• Bitcoin's total supply is capped, with supply elasticity close to zero.

Taking these factors together, we forecast that Bitcoin will be the best-performing major institutional asset over the next decade, reaching $1.6 million in 2036, with a 10-year compound annual growth rate of 34.3%. Compared with last year's report, which projected $1.3 million in 2035 and an annualized return of 28.3%, this forecast has been raised. The increase reflects continued expansion of Bitcoin's core addressable market and our stronger confidence in its long-term development path.

We expect Bitcoin to maintain a low-to-moderate correlation with other major asset classes such as stocks and bonds. It will remain highly volatile, but its volatility is likely to continue the downward trend of the past 15 years. Although the effect of Bitcoin's traditional four-year halving cycle is expected to weaken as the investor base broadens, it remains a cyclical asset and will still experience large drawdowns.

The report identifies the biggest long-term risks to Bitcoin as technological disruption from quantum computing and breakthroughs in AI mathematics, as well as regulatory and government policy risks.

Macroeconomic Assumptions

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

Bitcoin is often viewed as digital gold. While it has other uses and payment scenarios are expected to materialize in the future, store of value remains its core investment thesis.

The most important macro variables center on debt, fiscal deficits, fiat currency debasement, and changes in the dollar's global reserve currency status, all of which directly shape institutional demand for gold-like hard assets.

We believe the direction of macro trends is relatively clear: debt levels in major countries, including the United States, will continue to accumulate at an accelerating pace, and debt burdens will continue to strain economies. As investment strategist Lyn Alden said, 'This train has already left the station.'

In 2026, global sovereign bond yields rose sharply, suggesting the trend may be approaching a critical point. Without politically supported strong austerity measures, many Western democracies have reached a point of no return: high debt creates interest burdens, forming a debt spiral that is difficult to escape.

Over the next decade, facing heavy debt pressures, governments are likely to choose currency debasement. Legendary hedge fund investor Ray Dalio wrote in June 2025: 'When national debt is high, policymakers tend to cut rates and allow the currency in which the debt is denominated to depreciate. Betting on this trend is a favorable choice.'

In such an environment, hard assets such as Bitcoin will become an important part of investment portfolios.

U.S. Debt Expands Rapidly

This year marks the 250th anniversary of America's founding, but the fiscal reality is not encouraging. Here are five alarming facts about U.S. debt:

• Over the 200 years from 1776 to 1976, the United States accumulated $650 billion of debt; today, federal debt stands at $40.2 trillion.
• Half of U.S. federal debt has been accumulated over the past decade.
• Per capita, each U.S. citizen carries more than $127,000 in debt.
• The federal debt has reached 121% of GDP.
• Annual interest payments on the debt are $1.1 trillion, the third-largest spending item in the U.S. federal budget. If all of it were refinanced at current market rates, annual interest would approach $1.5 trillion.

Total U.S. federal debt, 1966-2026: $19.6 trillion in 2016 and $40.2 trillion in September 2026, with debt doubling over the past decade. Source: U.S. Treasury, period from January 1, 1966, to September 30, 2026.

The situation continues to deteriorate.

In fiscal year 2026 (through September), the U.S. fiscal deficit reached $2 trillion, up $218 billion year over year and $140 billion above the Congressional Budget Office's February forecast. The current administration campaigned on cutting fiscal spending, but that has not materialized.

In early 2025, Trump established the Department of Government Efficiency (DOGE), targeting $2 trillion in government spending cuts, but it quietly wound down in less than a year, ultimately achieving only $215 billion in cuts, just 10% of the target.

In fiscal year 2026, total U.S. government spending hit a record $7.4 trillion, and the fiscal deficit equaled 6.2% of GDP. This occurred during a period of strong economic growth; if the economy entered a recession, the deficit would become far more severe.

U.S. total fiscal spending by year, fiscal years 2016-2026: $7.4 trillion in fiscal year 2026, up $386 billion from the prior 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. Treasury.

The United States is not alone.

High debt burdens are a global phenomenon, and advanced economies with well-developed social welfare systems have seen debt continue to rise. The table below shows G10 countries' total debt, debt/GDP, annual deficits, 10-year government bond yields, and year-over-year changes.

This table uses IMF end-2025 statistics, covering federal, state, and local governments and excluding intragovernmental holdings; Japan is an IMF estimate.

Rising Demand for Hard Assets

Investors have already recognized the macro shift and are increasingly allocating to hard assets as safe havens. Since 2020, Bitcoin and gold have been the best-performing major asset classes globally.

Hard assets can strengthen without requiring an extreme scenario such as hyperinflation; simply continuing the post-pandemic macro environment would be enough. Markets have already proactively adjusted portfolios and increased allocations to hard assets. The model in this report assumes only that existing trends continue and does not presuppose hyperinflation.

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

Reserve Assets, Central Bank Gold Purchases, and the Shift in the Global Monetary Order

Another key macro trend is that the U.S. dollar's status as the world's dominant reserve currency is weakening. This is reflected in the continued decline of the dollar's share of global central bank foreign exchange reserves and in many central banks increasing their gold holdings.

The dollar's share of global foreign exchange reserves: 71.0% in 1999 and 56.7% in 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 a decade ago and up 14% from 2024, with the pace still accelerating.

Meanwhile, more than a dozen countries, including the United States, have established Bitcoin reserves. Over the past year, sovereign adoption of Bitcoin has been slow but is genuinely underway:

• 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 allocating 1% of its $180 billion total portfolio to Bitcoin could raise overall expected returns without increasing risk, calling Bitcoin an 'asset of the future'.
• 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 suggesting that both gold and Bitcoin would be components of central bank balance sheets by 2030.

Although these are all small-scale developments, they indicate that Bitcoin is gradually entering mainstream discussions of central bank reserve assets, much like the process by which wealth institutions embraced Bitcoin five years ago.

Annual net gold purchases by global central banks (USD billions), 2010‑2025; USD 96 billion in 2025, a 4.4x increase over the decade. Source: World Gold Council, Bloomberg, as of Dec 31, 2025.

Regulatory environment assumptions

The global crypto regulatory environment continues to improve. After the 2024 U.S. presidential election, an anti-crypto administration left office, and leadership changed at the SEC, OCC, CFTC, and Treasury. Over the past year, regulators introduced multiple favorable policies, strengthened institutional safeguards, and made it easier for institutions to allocate to crypto assets.

This trend is not limited to the United States; positive progress has also emerged in the Middle East, Hong Kong, China, the United Kingdom, and other regions. Nearly all major U.S. financial institutions have established crypto-related businesses. BlackRock, JPMorgan, and Morgan Stanley are deeply involved, and with broad participation from corporations and tens of millions of U.S. residents, policy is unlikely to be completely reversed.

However, regulation in 2026 has not been smooth. The long-awaited crypto Clarity Act failed to advance in Congress, mainly because Democrats had concerns about the bill's ethics provisions. The setback indicates that regulatory risks will continue to exist objectively in the future.

Crypto business positioning by major global institutions, including Bank of America, BlackRock, BNY Mellon, Charles Schwab, Citigroup, CME, Deutsche Bank, Deutsche Börse, Fidelity, JPMorgan, Goldman Sachs, HSBC, UBS, Visa, and Mastercard. Data sources: corporate announcements and presentation materials, as of Sep 30, 2026.

Bitcoin capital market assumptions

Return assumptions

We believe Bitcoin will be the best-performing major asset class globally over the next decade, with a 34.3% compound annual growth rate. There are three core drivers:

1) Institutional demand

Bitcoin is one of the few assets led first by retail investors. Traditional assets such as private equity and private credit were initially adopted by institutions before retail participation; Bitcoin is the opposite.

Bitcoin has a total supply of 21 million coins, of which 96% is already in circulation and mostly held by retail investors; most institutions currently have a 0% allocation.

According to Boston Consulting Group data, global institutional assets under management are approximately USD 147 trillion. We forecast that over the next decade institutions will allocate 1‑5% of portfolios to Bitcoin, implying potential buying demand of USD 1.5‑7.4 trillion. Annual new Bitcoin issuance is only about USD 14 billion, creating a large gap between new supply and potential demand, which will be balanced by price appreciation.

Institutional inflows have already begun. U.S. spot Bitcoin ETPs have been live for less than three years and have reached USD 108 billion in assets under management, with a large share 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 has a hard cap of 21 million coins, with 20.1 million already in circulation (95.7%). Its annual inflation rate is only 0.8%; after the 2028 halving it will fall to 0.4%, and by 2032 to 0.2%. By comparison, gold's annual new supply inflation is about 2%.

The key feature is completely inelastic supply. No matter how high demand rises or how high the price goes, no additional Bitcoin will be produced. Commodities such as gold and crude oil cannot do this. Large institutional demand combined with rigid supply underpins the bullish economic thesis for Bitcoin.

3) Rising concerns about fiat debasement

Concerns about global debt, fiscal deficits, and currency debasement are increasingly widespread, and markets are seeking hard assets to hedge fiat risk. Legendary investor Paul Tudor Jones wrote in 'The Great Monetary Inflation' that investors should allocate to a basket of hard assets and said, 'If I had to pick one bet, I would choose Bitcoin.'

U.S. federal debt has increased by USD 11.7 trillion over five years to USD 40.2 trillion; annual interest expense is USD 1.1 trillion, the third-largest spending item in the federal budget.

Institutional demand, rigid supply, and fiat debasement concerns are converging, giving Bitcoin a dual tailwind: first, capturing market share in the store-of-value category; second, benefiting from the expansion of the overall store-of-value market itself.

Valuation model

Bitcoin valuation models are still evolving, and there is no academic consensus. Bitwise uses a total addressable market (TAM) model: it estimates the future size of markets Bitcoin can enter, then forecasts penetration rates and combines them with Bitcoin's fixed total supply to derive a price.

Bitwise Bitcoin valuation framework, with bear, base, and bull scenarios

Our results are:

• Bear scenario: USD 130686 in 2036, 4.6% annualized
• Base case: 1599766 USD in 2036 (about 1.6 million USD), 34.3% annualized
• Bull case: 3667911 USD in 2036, 46.0% annualized

Among these, we believe the base case is the most likely. Compared with other institutions' forecasts: AllianceBernstein forecasts surpassing 1 million USD by 2033; Standard Chartered forecasts breaking 500,000 by 2030; ARK Invest's bull case forecasts about 1.2 million USD by 2030; Michael Saylor's Strategy forecasts 21 million USD in 2046.

Correlation assumptions

Over the past decade, Bitcoin's correlation with most major asset classes has remained low.

Bitcoin's 10-year average rolling correlation with other assets

Financial media often describe Bitcoin as a high-beta risk asset closely linked to equities. In historical terms, Bitcoin's 90-day rolling correlation with US equities has rarely exceeded 0.5, falling short of 'high correlation (>0.75)'. Media perception stems from short-term co-movement during bear-market crashes.

However, Bitcoin's correlation with US equities has risen gradually in recent years, a natural phenomenon as the asset matures: greater participation by traditional investors tends to push correlation modestly higher.

Bitcoin's long-term correlation with US Treasuries is close to 0, and for most of the time it stays between -0.25 and 0.25, which is highly significant for portfolio diversification. The reasons are:

One-time structural shift: Bitcoin has moved from a niche asset to a mainstream alternative asset, with millions of investors allocating to Bitcoin for the first time, creating asymmetric inflows unlike the two-way flows seen in mature assets. This effect will weaken over time but will remain relevant.

Different drivers: equities and bonds are mainly driven by economic growth, tax rates, geopolitics, and technological progress; Bitcoin is additionally influenced by adoption, regulation, and concerns about fiat currency debasement. These differences in drivers lead to divergent return patterns.

On the other hand, Bitcoin's correlation with gold has continued to rise, reaching a record high of 0.58 on 2026-09-11; as Bitcoin's store-of-value narrative gains acceptance, this trend is expected to continue and deepen.

Volatility assumptions

Over the past decade, Bitcoin volatility has continued to decline, and the volatility of volatility has also narrowed, indicating lower asset risk and a more diversified investor base. The most recent cycle peak-to-trough drawdown was 53%, compared with historical drawdowns above 80%, further confirming this trend.

We expect the pace of volatility decline to be half that of historical periods, as major risks such as regulation, custody, and liquidity have already been largely priced in. The model uses the midpoint between current volatility and expected 2036 volatility, 27.8%, as the overall 10-year assumption; in reality, volatility is higher in the earlier period and declines further in the later period as the asset matures.

2013-2025: Bitcoin's 30-day rolling volatility, overall downward trend

Four-year halving cycle assumption

Bitcoin's history has shown a four-year cycle pattern: three years of strong gains followed by a sharp one-year correction. On a calendar basis, 2025 appears to break the cycle, with a full-year return of -6%. However, the price trajectory still supports the cycle logic: a high of 126080 USD on 2025-10-06, after a 696% rise, followed by a low of 58717 USD on 2026-06-30, a 53.4% drawdown.

This is the shallowest bear-market drawdown in history; if the low is confirmed, it will be a very important signal that Bitcoin is becoming an institutionalized asset.

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

Logarithmic chart of Bitcoin returns across bull and bear cycles, with maximum drawdowns by cycle: 86%, 84%, 77%, and 53% for the current cycle.

Bitcoin vs. traditional assets: a comparison of long-term capital market assumptions

Bitwise combines the latest capital market assumptions from JPMorgan, PGIM, BlackRock, and Vanguard to compile 10-year expectations for major asset classes as a comparison benchmark.

10-year forecasts for major assets (2026-2036)

Risks and considerations

Bitcoin has a short history, high volatility, a continuously evolving regulatory environment, early-stage institutional adoption, and underlying technology born in 2008-2009. All of these factors make long-term forecasts inherently highly uncertain. Key risks:

• The historical sample is limited. Bitcoin only began trading publicly at scale in 2010, institutional products started in 2014, and spot ETPs were not launched until 2024. There is limited data available for backtesting. Future macro conditions, regulation, and market structure could change dramatically, and past performance may not be repeatable.
• Regulatory and legislative risks. Global cryptocurrency-related regulations remain immature, and major shifts can occur at any time, with both bullish and bearish outcomes possible. The current friendly regulatory environment may not persist.
• Institutional, corporate, and sovereign adoption is a new trend. Bitcoin was initially driven by retail investors, and the entry of institutions and governments is a relatively recent development; the trend cannot be guaranteed to continue.
• Technical and quantum computing risks. Bitcoin relies on its underlying code and requires continuous iteration. Quantum computing and AI-accelerated mathematical breakthroughs may pose threats at the cryptographic level. Bitcoin may require major upgrades in the future to switch to quantum-resistant cryptography, and the upgrade process itself carries uncertainty. Even if the protocol is upgraded, assets will remain at risk if user wallets are not migrated to quantum-resistant addresses. The community has already begun relevant work, but many issues remain unresolved. The development of AI may accelerate the risk of cryptographic breakthroughs.

Beyond these, macroeconomic conditions, trading mechanisms, self-custody security, and other areas also pose risks. This report only lists key uncertainties and does not exhaust all risks.

Summary

In just 17 years, Bitcoin has grown from a niche investment on the margins into a 1.7 trillion USD asset studied and allocated by top global institutions. As more institutions include Bitcoin in their portfolios, high-quality forecasts and assumptions become especially important.

This report presents our core long-term judgments:

• 34.3% expected annualized return: Bitcoin may become the best-performing major asset class globally over the next decade.
• Volatility declining but still the highest: volatility has decreased relative to historical levels, but Bitcoin remains the most volatile major asset.
• Portfolio diversification value: maintains low-to-medium correlation with most assets, while its correlation with gold has increased, making it suitable for institutional portfolio diversification.
• Institutional capital inflows of 1.5 trillion-7.4 trillion USD: institutional allocations of 1-5% of portfolios would create massive buying demand.
• Expanding store-of-value demand: government debt, fiscal expansion, and monetary overissuance continue to pressure fiat purchasing power, lifting demand for hard assets such as gold and Bitcoin.
• Regulatory inertia: Wall Street and the broader market have widely accepted crypto, making it difficult for existing pro-crypto regulatory policies to be fully reversed.

Source: TechFlow