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- VanEck says that Bitcoin holds the potential to transform the International Monetary System as a reliable reserve currency with greater flexibility and efficiency compared to traditional fiat currencies.
- It also stated that by 2050, 10% of global traders will happen in Bitcoin with central banks holding nearly 2.5% in BTC.
In its latest research report, asset manager VanEck has outlined an ambitious scenario wherein the Bitcoin price could reach a staggering $2.9 million per BTC as a “base case scenario” by 2050.
Matthew Sigel, the head of digital assets at VanEck along with senior investment analyst Patrick Bush, wrote that the projected value of BTC depends largely on Bitcoin’s adoption as a global medium of exchange as well as a reserve asset.
This prediction from VanEck takes into consideration the global growth projections along with the velocity of money. For $2.9 million per coin, the total valuation of Bitcoin would be somewhere around $61 trillion.
Apart from the base case scenario, VanEck has also shared its bull and bear case scenarios. In the bear case scenario, VanEck projects the BTC price to hit a minimum of $130,314 while in the bull case scenario, it expects the Bitcoin price to rally to $52.4 million per coin. As of press time, Bitcoin is facing some selling pressure and trading 3.30% down at $64,097 with a market cap of $1.263 trillion.
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With its base case scenario, VanEck predicts that Bitcoin could cater to 10% of the world’s international trade and 5% of domestic trade by 2050. Additionally, the asset manager also predicts that the central banks could hold 2.5% BTC as a reserve. This CNF update sheds light on the current big holders of Bitcoin in the world.
Some US lawmakers have also been proposing the idea of having Bitcoin as a US strategic reserve, reported CNF. Wyoming Senator Cynthia Lummis is reportedly working on a draft bill with the Bitcoin reserve proposal which she will present at the upcoming Bitcoin Conference.
Bitcoin’s Role In shiting the Global Monetary System
Delving into the current trends in the International Monetary System (IMS) VanEck projected a shift away from traditional reserve assets like the USD, Euro, and other fiat currencies. The VanEck report attributes the potential shift to the declining global GDP shares and diminishing confidence in fiat currencies due to deficit spending and other geopolitical conditions.
The report also noted that with inflation and devaluation surges, businesses and consumers worldwide would recognize the inherent flaws with the fiat currency systems. Furthermore, as central banks print the fiat currencies out of thin air, they tend to lose their value quickly over some time.
VanEck believes that this would ultimately highlight BTC’s potential as a store of value, a neutral medium of exchange that has immutable property rights and a predictable monetary policy. VanEck points out several areas where Bitcoin could change the International Monetary System (IMS). It noted that similar to gold, Bitcoin would prove to be a reliable reserve currency with greater flexibility and efficiency. VanEck also believes that $6 trillion could flow into Bitcoin and other crypto assets over the next 20 years, per the CNF update.
However, VanEck also acknowledges the risks associated with Bitcoin’s growth story such as the high energy demand of future Bitcoin mining. Furthermore, with Bitcoin turning into a deflationary asset class, the transaction fees would be the primary revenue source for miners.
