Bitcoin to hit $1.3 million by 2035 with annual growth rate of 28%: Bitwise

• Bitcoin could surge to $1.3 million by 2035, according to a Bitwise report on Monday.
• The firm's analysts estimate that Bitcoin will see annualized returns of 28% over the next decade.
• Bitwise claims the biggest driver for Bitcoin's growth is its rising institutional demand and inelastic supply.

Bitcoin (BTC) is expected to become the best-performing institutional asset over the next decade, reaching a price of $1.3 million by 2035, according to a Bitwise report on Monday.

Bitcoin to grow by 28% annually over the next decade

In a report on Monday, asset manager Bitwise projects a decade of strong growth for Bitcoin, estimating it could emerge as the best-performing institutional asset, with a record price of $1.3 million by 2035.

The firm expects Bitcoin to deliver a 28.3% compound annual growth rate during the period, outpacing expectations for traditional assets such as stocks, bonds, and gold. 

Bitwise analysts led by Matt Hougan highlighted three major factors responsible for Bitcoin's price growth.

The first is Bitcoin's growing status as an institutional asset, with larger investors expected to pour in capital over the next decade. The analysts projected that institutional investors, who reportedly control $100 trillion in total assets, will move up to 5% of that capital into Bitcoin over the next decade, "meaning they will need to buy $1 trillion to $5 trillion of Bitcoin."

The increasing institutional demand for hard-asset exposure as a hedge against inflation and currency debasement could fuel the narrative, the report states.

Bitwise also highlighted Bitcoin's inelastic supply as a major catalyst for price appreciation, adding that its supply hard cap remains constant, regardless of demand, unlike gold or other top commodities.

"The collision of large institutional demand with limited, inelastic supply provides a simple economics-driven rationale for our thesis," Bitwise added.

The analysts further projected that major economies, including the US, will continue to accumulate debt, while the US Dollar's role as the dominant reserve currency will see a further decline.

Against this backdrop, they expect Bitcoin to solidify its position as an alternative asset and eventually rival gold as the hard asset of choice for central banks.

"Because Bitcoin is more functional in certain ways than gold (easier to store, transport, and authenticate), it may compete with gold over time as one of the preferred hard assets held by central banks and governments.

Bitwise argued that Bitcoin's traditional four-year cycle, once closely tied to halving events, is losing significance as institutional investors reshape the market. The firm expressed that the growth of Bitcoin exchange-traded funds (ETFs), combined with the impact of BTC treasury companies, could offset the four-year trend.

"The four-year cycle is dead. Bitcoin is no longer a retail-driven market," the report noted.

The analysts further projected that Bitcoin will maintain a low long-term correlation with stocks and bonds over the next decade. They cited factors including differences in market drivers as reasons for their estimates.

"While stocks and bonds are driven by economic growth, tax rates, geopolitical developments, and technological progress, Bitcoin is driven by adoption rates, regulatory advances, and worries about fiat debasement, among other factors," the report notes.

Bitwise analysts also highlighted several risks associated with Bitcoin, including its limited track record, less developed crypto regulatory frameworks, technological risks from advancements in quantum computing, and macroeconomic factors, among others.

Bitcoin is trading at $111,600 at the time of publication, up 1% over the past 24 hours.