Bitwise Asset Management has raised its long-term outlook for bitcoin, lifting its 2036 base-case price target to $1,599,766 in its newly released 2027 Bitcoin Long-Term Capital Market Assumptions, up from $1.3 million a year earlier.

The forecast implies a 34.3% compound annual growth rate from the roughly $83,557 price the firm used as of September 30, 2026. Bitwise's bear case sits at $130,686, while its bull case projects $3.67 million. Documents of this kind are planning inputs rather than single-path forecasts: asset managers publish long-term capital market assumptions to frame multi-year allocation decisions, and the base, bear and bull cases mark out a range of modeled outcomes across the decade.

The base case rests on three arguments: institutional investors will keep adding bitcoin to portfolios, new supply stays fixed on a predictable schedule, and rising government debt will push investors toward assets that cannot be printed.

A $147 Trillion Institutional Opportunity

Bitwise estimates that institutions controlling about $147 trillion could allocate 1% to 5% of their portfolios to bitcoin, which the firm says would translate into $1.5 trillion to $7.4 trillion of purchases. The network issues about $14 billion in new coins per year, and Bitwise argues that gap will push prices higher.

Institutional plumbing is already expanding. U.S. spot bitcoin ETPs hold about $108 billion, according to the report — small against the modeled purchase range. Banks and brokerages are building custody and trading services, and a recent report describes sovereign wealth funds and family offices buying during the 2026 decline.

Regulators are also moving. A Federal Reserve capital proposal aimed at easing bank custody rules could widen access for large institutions, if adopted.

The Shallowest Drawdown on Record

The past year tested that thesis. Bitcoin fell 53.4% from its October 2025 peak of $126,080 to a June 30, 2026 low of $58,717. Bitwise calls that drawdown the shallowest in the asset's history; prior cycle declines measured 77%, 84% and 86%. Drawdown depth is a central variable for professional allocators, who typically size positions against how far an asset has historically fallen.

Whether the shallow decline signals a new pattern or a pause is less settled. Bitwise expects the four-year cycle to weaken as the investor base broadens. Others see the cycle still at work: VanEck argues the current slump follows the historical halving pattern, and Fidelity has pointed to a possible floor around November 2026 if past timing holds. NYDIG has said a repeat of earlier bear markets could push the cycle low near $38,000 to $39,000, while Cathie Wood has argued the market is nearly through the downturn. Each view carries a different price floor and timeline.

Volatility's Long Decline

Volatility is the other pillar of the forecast, and the metric institutions tend to weigh first, since portfolio risk budgets are usually set against how much swing an asset can contribute. Bitwise models a 27.8% average volatility over the decade, the midpoint between today's level and its 2036 expectation. Grayscale's research head recently put one-year volatility at 43%, against a 10-year average of 64%, and lower than the volatility of 19% of S&P 500 companies. Charles Schwab's research found the asset remains prone to sharp drawdowns despite the lower readings. A Deutsche Bank analyst has described the trend as a sign of a maturing market.

Bitwise also reports that bitcoin's correlation with gold reached a record 0.58 in September 2026. The firm expects that relationship to deepen, which positions bitcoin as a store-of-value asset. That link cuts both ways: if gold weakens, bitcoin may lose the support it gained from the same investor demand. Gemini has predicted that at least one country will shift part of its gold reserves into bitcoin in 2026, a forecast that has yet to materialize.

What Could Go Wrong

The report is candid about the risks. Bitcoin's track record is short: its software was developed in 2008 and 2009, trading began on public exchanges in 2010, the first institutional product with bitcoin exposure launched in 2014, and spot ETPs arrived in 2024. Bitwise writes that forecasts built heavily on history carry uncertainty because future returns may differ from the past.

Regulation is a second concern. The Clarity Act's failure in Congress, which the report traces to Democratic concerns about ethics provisions, shows that progress can stall, even as the firm argues recent advances are unlikely to be rolled back.

Technology is a third. Quantum computing, and mathematical advances accelerated by AI, could threaten the cryptography that secures bitcoin wallets. Bitwise says the network will need a major upgrade at some point, and holders who fail to move funds to new addresses could be exposed. Developers have made progress over the past year, the report says, but major issues remain unresolved.

The near-term markers for the thesis are already identifiable: whether the Federal Reserve adopts its custody proposal, whether Congress revisits market-structure legislation after the Clarity Act stalled, whether any government follows through on shifting gold reserves as Gemini projected, and how the cycle-low timelines staked out by Fidelity, NYDIG and Cathie Wood play out.

Bitcoin's price is near $80,500.

This article first appeared on Bitcoin Magazine and was written by Micah Zimmerman.