Bitcoin to Outperform Traditional Assets in 10 Years

Bitwise Asset Management predicts that Bitcoin will emerge as the leading major asset over the next ten years. They forecast a compound annual growth rate of 28% and a gradual decline in volatility, as outlined in a memo previewing their Long-Term Capital Market Assumptions for Bitcoin. Authored by CIO Matt Hougan, the report emphasizes the relevance of this new framework for large platforms and professional investors who now regard Bitcoin as a vital component of their portfolios. This shift comes on the heels of last year's spot ETF launches and their approvals on various national platforms. Hougan highlights that this year alone, Bitwise has received about a dozen requests for long-term projections, a significant increase compared to zero requests from 2017 to 2024. He views this trend as indicative of a broader change in institutional attitudes towards Bitcoin, marking its evolution from a niche asset to a prominent investment opportunity. While the full report will delve into the quantitative analysis supporting this forecast, the preview indicates that Bitcoin’s expected returns, volatility, and correlations are advantageous compared to traditional asset classes. Bitwise characterizes Bitcoin’s correlations as “low” in comparison to major traditional assets, falling between -0.5 and 0.5, an attribute that many investors value for its diversification benefits. The asset management firm likens its new assumptions to the annual capital market outlooks employed by large Wall Street firms to establish strategic allocations for stocks, bonds, real estate, and alternative investments. With the rise of products like spot Bitcoin ETFs, Hougan argues that similar analytical guidance for digital assets has become essential, particularly since this asset class has accumulated over $146 billion in assets. The data indicates that by January 2024, on-chain holdings related to Bitcoin ETFs accounted for nearly 7% of Bitcoin's total supply of 21 million. Corporate Bitcoin treasuries, led by a stack of 629,376 BTC from Strategy, have also gathered more than $80 billion in assets. To facilitate massive Bitcoin acquisitions, these public companies have tapped capital markets, offering equity and convertible securities. Bitwise plans to release the complete Bitcoin Long-Term Capital Market Assumptions later this week, which will include their methodology and side-by-side comparisons with forecasts from major firms like JPMorgan, PIMCO, BlackRock, and Vanguard regarding traditional asset classes.