Bitcoin could attract trillions of dollars from institutional investors over the next decade as the cryptocurrency becomes a mainstream portfolio asset, Bitwise Chief Investment Officer, Matt Hougan, said, arguing that even a small allocation from the world’s largest pools of capital could materially reshape the market.
Hougan estimates that global institutions control between $100 trillion and $200 trillion in assets. If just 1% of that capital were allocated to Bitcoin, the resulting investment would amount to between $1 trillion and $2 trillion.
The Calculation is Straightforward:
- Global institutional assets: $100 trillion-$200 trillion
- Assumed Bitcoin allocation: 1%
- Potential Bitcoin inflows: $1 trillion-$2 trillion
Hougan said that level of institutional demand would support his long-term Bitcoin outlook, although he expects the shift to take more than a decade.
“It’s a process that will take 10+ years,” Hougan said.
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His $1.3 million Bitcoin price target for 2035 is based on a separate store-of-value calculation.
Hougan argues that Bitcoin will increasingly compete with gold and other assets used to preserve wealth. He estimates the global store-of-value market could continue expanding at its historical rate of about 13% a year.
Gold’s market capitalization has grown from about $2 trillion in 2004, when gold exchange-traded funds launched, to roughly $30 trillion today, according to Hougan.
If that market grows at 13% annually for another decade, its value would rise substantially. Bitcoin capturing 25% of that expanded market would, in Hougan’s model, put the value of each Bitcoin at about $1.3 million by 2035.
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The argument also illustrates why Hougan expects institutional capital, rather than corporate buyers, to become the next major driver of Bitcoin demand.
- Financial advisers and
- family offices
are likely to be among the first professional investors to increase allocations, he said, followed over time by
- foundations,
- endowments,
- pension funds,
- insurers,
- sovereign wealth funds, and
- central banks.
The shift is already visible in filings showing exposure to spot Bitcoin ETFs while major wealth managers including Morgan Stanley and Wells Fargo have expanded access to Bitcoin for clients, Hougan said.
“Institutions have most of the money in the world,” Hougan said.
“Crypto grew up in retail, which took it from $0 to $2 trillion. But if it wants to get from $2 trillion to $20 trillion, it’s going to be institutional capital that leads the way.”
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