CF Benchmarks, a wholly-owned subsidiary of Kraken, said on Thursday that institutional investors are increasingly analyzing Bitcoin through the lens of portfolio construction rather than short-term price cycles. The company expects the base price to reach $1.4 million by 2035.
In its 42-page report titled “Building Bitcoin Capital Market Assumptions: A Framework for Practitioners’ Strategic and Tactical Allocations,” the UK’s FCA-regulated benchmarking agency noted that Bitcoin can be evaluated using the same capital market assumptions that apply to traditional assets, including expected returns, volatility and correlations.
The shift reflects growing institutional participation as regulated markets become more open, liquidity in spot and derivatives markets deepens and regulatory transparency increases, the company said.
A portfolio-based approach to Bitcoin
Rather than providing near-term price predictions, CF Benchmarks applies multiple valuation frameworks to assess Bitcoin’s long-term role in a diversified portfolio. These models include comparative valuations with other stores of value, production economics linking market prices to mining costs, and sensitivity analysis of Bitcoin to global liquidity conditions.
CF Benchmarks said that overall, these methodologies suggest that Bitcoin’s value is underpinned by its growing share of the global store of value market, its fixed supply schedule, and its responsiveness to monetary conditions. As institutional participation increases, the firm expects volatility to decline over time, while correlations to traditional asset classes remain relatively low, enhancing diversification potential.
Long-term price scenario to 2035
CF Benchmarks used these frameworks to produce a series of long-term valuation results for Bitcoin through 2035 based on different adoption paths.
In its most conservative scenario, the company simulated a bear market scenario in which Bitcoin continues to gain market share at its historical pace, accounting for approximately 16% to 33% of gold’s market capitalization. In this case, CF Benchmarks estimates that Bitcoin price will be around $637,000 by 2035.
Its base case assumes wider institutional adoption and faster growth, with Bitcoin accounting for about a third of gold’s market capitalization. This probability-weighted scenario implies a price of about $1.42 million by 2035, the report said.
In a more optimistic bull case, CF Benchmarks simulates Bitcoin becoming the world’s dominant store of value, surpassing gold’s market capitalization. Driven by accelerated institutional and sovereign adoption, this scenario projects a valuation of nearly $2.95 million by 2035.
Impact on Institutional Portfolios
In addition to the price results, CF Benchmarks said its simulations showed that a strategic allocation of approximately 2% to 5% to Bitcoin could meaningfully improve portfolio efficiency. In these models, Bitcoin’s high expected returns, declining volatility, and low correlation with stocks and bonds widen the efficient frontier, allowing for higher return targets to be achieved at comparable or lower levels of risk.
The firm believes that as regulatory clarity increases and institutional access deepens, investors may focus less on speculative narratives and more on rigorous allocation, rebalancing and risk management frameworks.
Rather than viewing Bitcoin as an outlier, CF Benchmarks’ analysis positions it as an asset that can increasingly be modeled as a long-term portfolio component, with valuation outcomes tied to the adoption of dynamic and macroeconomic conditions rather than short-term market sentiment.
