Bitwise Predicts Bitcoin Could Reach $1.6 Million by 2036, Tied to Gold Market Share

Bitwise has made a bold prediction that Bitcoin (BTC) could achieve a price of $1.6 million by the year 2036, a substantial increase from its current valuation of $83,557. This forecast hinges on Bitcoin securing approximately 25% of the store-of-value market, which it shares with gold.

The total addressable market model utilized by Bitwise estimates that the combined market for gold and Bitcoin will grow from $31.1 trillion to $109.8 trillion by 2036. Of this, about $27.5 trillion is attributed to the store-of-value segment, which constitutes roughly 82% of Bitcoin's projected value in 2036. This reliance on gold's market share introduces a significant variable into Bitwise's model.

Currently, Bitcoin's circulating supply of 20.1 million coins is valued at approximately $1.7 trillion, representing about 5% of today's $31.1 trillion market. Other markets included in the model, such as institutional portfolios and national treasury reserves, contribute an additional $6 trillion.

Bitwise has observed a tightening correlation between Bitcoin and gold, noting that their 90-day correlation reached a record 0.58 on September 11. The report anticipates this relationship will deepen as Bitcoin's recognition as a store of value grows. The model predicts a correlation of 0.21 with gold over the next decade, an increase from the 10-year average of 0.11.

In contrast to Bitwise's optimistic projections, JPMorgan's forecasts for Bitcoin's returns by 2036 are significantly lower, suggesting annual returns of only 10%. In a more bearish scenario, if Bitcoin captures just 2.5% of the store-of-value market, its price could drop to $130,686, yielding a mere 4.6% annual return.

As the cryptocurrency landscape evolves, factors such as quantum computing, AI advancements, and regulatory changes are identified as potential risks. The ultimate success of Bitcoin's valuation will largely depend on its ability to shift market share from gold by 2036.