CF Benchmarks, a subsidiary of Kraken, has announced a significant trend among institutional investors who are shifting their approach to analyzing Bitcoin (BTC), currently priced at $85,483.82. Instead of focusing on short-term price fluctuations, these investors are increasingly viewing Bitcoin through the lens of long-term portfolio construction. In a recent 42-page report, “Building Bitcoin Capital Market Assumptions: A Practitioner’s Framework for Strategic and Tactical Allocations,” the U.K.-based benchmark administrator has modeled a base-case price for Bitcoin at approximately $1.4 million by the year 2035.
The report outlines that Bitcoin can be assessed using similar capital market assumptions as traditional assets, evaluating expected returns, volatility, and correlations. This analytical shift is largely attributed to the growing participation of institutional investors as they gain access to more regulated markets, experience deeper liquidity in both spot and derivatives markets, and benefit from improving regulatory clarity.
CF Benchmarks emphasizes a portfolio-based approach to Bitcoin investment. Rather than projecting short-term price movements, the firm employs various valuation frameworks to evaluate Bitcoin’s long-term potential within diversified portfolios. These frameworks include comparative valuations against traditional stores of value, production economics linking Bitcoin’s market price to mining costs, and an analysis of Bitcoin’s sensitivity to global liquidity conditions.
The firm’s findings suggest that Bitcoin’s value is bolstered by its increasing share in the global store-of-value market, its predetermined supply schedule, and its responsiveness to monetary policy shifts. As institutional interest increases, CF Benchmarks predicts that Bitcoin’s volatility is likely to decrease over time, while its correlation with traditional asset classes remains relatively low, enhancing its diversification potential.
In exploring long-term price scenarios through 2035, the firm outlines three possible pathways based on various adoption rates. Its most conservative model suggests that if Bitcoin continues to gain market share at its historical pace—capturing 16% to 33% of gold’s market capitalization—it could reach a price of around $637,000 by 2035. The base-case scenario, which assumes broader institutional adoption, estimates Bitcoin could approach roughly one-third of gold’s market worth, equating to a price of approximately $1.42 million.
A more optimistic projection anticipates that Bitcoin could become the dominant global store of value, potentially surpassing gold’s market capitalization altogether, leading to a valuation close to $2.95 million by 2035. This scenario is driven by accelerated institutional and sovereign involvement.
Beyond mere price projections, CF Benchmarks argues that a strategic allocation of 2% to 5% of portfolios to Bitcoin could substantially enhance portfolio efficiency. The firm notes that Bitcoin’s anticipated high returns, decreasing volatility, and low correlations with traditional equities and bonds could create a more efficient investment frontier, allowing for higher return targets with comparable or reduced risk levels.
As regulatory clarity improves and institutional access continues to expand, CF Benchmarks suggests that investors will likely shift their focus from speculative trends toward disciplined allocation strategies, including rebalancing and robust risk management techniques. This analysis positions Bitcoin not just as an outlier asset but as a legitimate component of long-term portfolio strategies, where valuation outcomes will be increasingly influenced by adoption dynamics and macroeconomic conditions rather than short-term market sentiment.
