CF Benchmarks, a wholly-owned subsidiary of Kraken, stated on Thursday that institutional investors are increasingly analyzing bitcoin BTC$88,539.42 through the lens of portfolio construction rather than short-term price cycles. The firm models a base-case price of $1.4 million by 2035.

In its 42-page report, titled "Building Bitcoin Capital Market Assumptions: A Practitioner's Framework for Strategic and Tactical Allocations," the U.K.-based, FCA-regulated benchmark administrator argued that bitcoin can be evaluated using the same capital market assumptions applied to traditional assets, including expected returns, volatility and correlations.

That shift reflects growing institutional participation as regulated markets become accessible, deeper liquidity in spot and derivatives markets and improving regulatory clarity, according to the firm.

A portfolio-based approach to bitcoin

Instead of offering near-term price calls, CF Benchmarks applies multiple valuation frameworks to assess bitcoin’s long-term role in diversified portfolios. Those models include comparative valuation against other stores of value, production economics that link market price to mining costs and analysis of bitcoin’s sensitivity to global liquidity conditions.

Taken together, CF Benchmarks said these approaches suggest bitcoin’s value is supported by its expanding share of the global store-of-value market, its fixed supply schedule and its responsiveness to monetary conditions. As institutional participation increases, the firm anticipates that volatility will decline over time, while correlations with traditional asset classes remain relatively low, thereby enhancing diversification potential.

Long-term price scenarios through 2035

Using those frameworks, CF Benchmarks derived a range of long-term valuation outcomes for bitcoin through 2035, based on differing adoption paths.

In its most conservative scenario, the firm modeled a bear case in which bitcoin continues to gain market share at its historical pace, capturing roughly 16% to 33% of gold’s market capitalization. Under that scenario, CF Benchmarks estimated a bitcoin price of about $637,000 by 2035.

Its base case assumes broader institutional adoption and faster growth, with bitcoin reaching roughly one-third of gold’s market capitalization. That probability-weighted scenario implies a price of around $1.42 million by 2035, according to the report.

In a more optimistic bull case, CF Benchmarks modeled bitcoin becoming the dominant global store of value, surpassing gold’s market capitalization. That scenario projected a valuation of nearly $2.95 million by 2035, driven by accelerated institutional and sovereign adoption.

Implications for institutional portfolios

Beyond price outcomes, CF Benchmarks said its simulations suggest a strategic allocation of roughly 2% to 5% to bitcoin could meaningfully improve portfolio efficiency. In those models, bitcoin’s high expected returns, declining volatility and low correlations with equities and bonds expanded the efficient frontier, allowing for higher return targets at comparable or lower levels of risk.

The firm argued that as regulatory clarity improves and institutional access deepens, investors are likely to focus less on speculative narratives and more on disciplined allocation, rebalancing and risk management frameworks.

Rather than treating bitcoin as an outlier asset, CF Benchmarks’ analysis positions it as an asset that can be increasingly modeled to be a component of long-term portfolios, with valuation outcomes tied to adoption dynamics and macroeconomic conditions rather than short-term market sentiment.