Long-Term Outlook
Hougan said he initially worried that the latest data would force them to reduce their forecast to $1 million or lower, particularly with sentiment taking a hit, inflation remaining stubborn, interest rates rising, war in the Middle East, and concerns about an AI bubble. However, the numbers told a different story. The higher price target comes down to two things: the size of the markets Bitcoin can address and the share of those markets it can capture.
On the first front, Bitwise increased its estimate of the store-of-value market over the next decade from $91 trillion to $110 trillion, reflecting growing investor concerns about continued fiat debasement and high inflation. Its projection for the institutional investment market also increased from $216 trillion to $303 trillion. Other potential markets, including offshore wealth and emerging market currencies, expanded as well. A larger addressable market means a higher potential Bitcoin price if it captures a meaningful share of that opportunity.
The second factor is Bitcoin’s ability to gain market share. According to Hougan, several developments have strengthened that case. Wealth management platforms such as Wells Fargo and Merrill Lynch have moved towards Bitcoin rather than away from it, while central banks and sovereign wealth funds have also inched closer. Bitcoin’s cyclical volatility has continued to decline, too.
Correlation With Gold Rises
Despite these developments, Bitwise kept its assumptions about Bitcoin’s share of each market unchanged from last year, choosing not to increase them. Hougan also acknowledged the counterarguments. Most of the money flowing into store-of-value assets has gone into gold rather than Bitcoin, the latest downturn once again highlighted the crypto asset’s vulnerability to sharp losses, and ETF inflows have slowed.
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But he pointed to several developments that suggest the market has become more resilient. Bitcoin’s correlation with gold has increased, its 53% peak-to-trough decline was shallower than losses in previous bear markets, and institutional investors continued adding exposure throughout the downturn despite slower ETF purchases. Bitcoin’s share of the store-of-value market has grown from less than 1% a decade ago to more than 5% today.
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