Bitwise predicts Bitcoin will reach $1.6 million by 2036

Investment company Bitwise predicts that the price of Bitcoin will reach $1.6 million by 2036, approximately 19 times higher than the starting price of $83,557. Much of this estimate depends on Bitcoin capturing a quarter of the store of value market, which it shares with gold, writes BeInCrypto.

The store of value market accounts for about $27.5 trillion of the $33.6 trillion in the Bitwise model—approximately 82 percent of the projected value of Bitcoin by 2036. This makes the target price more vulnerable to this assumption than to any other in the model.

How the model is built

Bitwise uses a total addressable market model: it evaluates each market that Bitcoin can serve, applies a penetration rate, and divides by the total issuance of 21 million coins. The company expects the combined market of gold and Bitcoin to grow from $31.1 trillion to $109.8 trillion by 2036. The base scenario allocates 25 percent of this volume to Bitcoin.

At a starting price of $83,557, 20.1 million coins in circulation are worth about $1.7 trillion—approximately 5 percent of the current market of $31.1 trillion. The remaining six markets in the model, including institutional portfolios and national treasury reserves, add only about $6 trillion.

Bitwise also notes the strengthening connection between Bitcoin and gold: the 90-day correlation reached a record 0.58 on September 11. "We expect this connection to persist and deepen over time as awareness of Bitcoin's properties as a store of value grows," the report states. The model assumes a correlation with gold at 0.21 in the next decade compared to an average of 0.11 over the past 10 years.

Scenarios and comparisons

The bearish scenario reduces the store of value market share to 2.5 percent and nullifies all other markets. This results in a 2036 price of $130,686 and an annual return of 4.6 percent.

Bitwise's base scenario implies an annual return of 34.3 percent, significantly higher than JPMorgan's scenarios with 10 percent annual returns. Jim Cramer stated this month that he still prefers gold as a portfolio hedge over Bitcoin.

Bitwise identifies key risks as quantum computing, AI-based mathematical advancements, and regulatory reversals. However, the widest variance in the model depends on how much of gold's role will be taken over by Bitcoin by 2036. Bitwise CEO Matt Hougan wrote on social network X: "Bitcoin is in a better position today than ever before. We are raising our ten-year target forecast from $1.3 million to $1.6 million."