Matt Hougan, the Chief Investment Officer at Bitwise, forecasts that institutional investments could direct trillions into bitcoin over the next decade as the cryptocurrency gains acceptance as a mainstream financial asset.
Large Capital Pools Could Drive Bitcoin Growth
According to Hougan, a mere 1% allocation of the $100 trillion to $200 trillion in assets managed by institutions could lead to significant long-term price increases for bitcoin, potentially reaching a target of $1.3 million per coin by 2035.
He anticipates that the future demand for bitcoin will increasingly come from larger entities like pension funds, endowments, and sovereign wealth funds, rather than corporate buyers, particularly as spot bitcoin ETFs become more widely available and accessible.
In an email interview with CoinDesk, Hougan explained that the initial wave of institutional investors is likely to consist of financial advisors and family offices. He noted signs of this shift are already evident in recent 13F filings related to spot bitcoin ETFs and the efforts of major wealth management firms, such as Morgan Stanley and Wells Fargo, to facilitate client access to bitcoin.
Looking ahead, he expects larger institutional capital pools, including foundations, insurance companies, and even central banks, to begin investing in bitcoin. "It’s a process that will take 10+ years," he remarked.
Hougan emphasized the importance of scale, noting that institutions control a substantial amount of global assets. He believes that a 1% investment in bitcoin could significantly boost its price.
His projection of $1.3 million per bitcoin by 2035 is based on the assumption that bitcoin will capture a 25% share of an expanding market for stores of value. He cited gold's market capitalization growth from about $2 trillion in 2004 to approximately $30 trillion today, suggesting that if this trend continues, bitcoin could reach his target price.
"When assessing bitcoin's value, many compare it to gold in the store-of-value market. If bitcoin captures 50% of this market, each coin could be worth around $715,000," he added.
Hougan pointed out that institutional investors hold the majority of the world's wealth. "While retail investment helped propel crypto from $0 to $2 trillion, transitioning to a $20 trillion market will require institutional capital to take the lead," he stated.
Although Strategy has been a significant bitcoin buyer, recently becoming the largest corporate holder with 842,138 BTC, Hougan believes that corporate buying will no longer be the primary source of demand for bitcoin.
He explained that Strategy capitalized on unique market conditions to enhance its bitcoin purchases, but those advantages have diminished. With the introduction of spot ETFs, it has become more challenging for Strategy to maintain a premium on its net asset value, and they have already maxed out their debt capacity against their existing assets.
"The easy paths to accumulation have been exhausted," Hougan noted, adding that while Strategy will continue to acquire bitcoin, it will do so at a slower pace aligned with market cycles.
For long-term investors, Hougan suggested that the focus should be on whether bitcoin has reached its peak rather than its current price floor.