In its latest research report, VanEck outlined an ambitious scenario in which Bitcoin (BTC) could reach a staggering price of $2.9 million per coin by 2050, based on a “base case scenario.”
According to the report, authored by the firm's head of digital assets Matthew Siegel and senior investment analyst Patrick Busch, the projected valuation hinges on Bitcoin's adoption as a global medium of exchange and reserve asset, which could revolutionize the international monetary system.
10% of world trade
The firm's base case predicts that Bitcoin could hit $2.9 million per coin, while its bearish case sees BTC hitting a low of $130,314, while its bullish case sees it soaring to as much as $52.4 million per coin.
VanEck's base case scenario predicts that Bitcoin could power 10% of global international trade and 5% of domestic trade by 2050. The firm also predicts that central banks will hold 2.5% of their assets in BTC.
This scenario, based on global growth projections and monetary velocity, suggests a potential price of $2.9 million for Bitcoin and a total market capitalization of $61 trillion.
The report highlights that emerging Bitcoin Layer 2 (L2) solutions will solve scalability issues that have historically been a major barrier to Bitcoin adoption. These solutions will enable Bitcoin to support a global monetary system that better serves the needs of developing countries.
Reforming the monetary system
Van Eck's analysis takes a detailed look at current trends in the International Monetary System (IMS) and predicts a shift away from traditional reserve currencies such as the US dollar, euro, British pound, and Japanese yen.
The report cited the decline in global GDP shares of these economic leaders and declining confidence in their currencies due to budget deficits and geopolitical decisions as reasons for this potential shift, adding that as inflation and devaluation rise, businesses and consumers around the world are likely to recognize the deep-rooted shortcomings of alternative fiat currencies.
According to the report, this could ultimately highlight Bitcoin's potential as a neutral medium of exchange with immutable property rights and predictable monetary policy.
Van Eck outlined several key areas where Bitcoin can transform IMS: He said Bitcoin's immutable monetary policy and decentralized nature position it as a reliable reserve currency similar to gold, but with more flexibility and efficiency.
L2 solutions such as the Lightning Network and various sidechains are poised to expand Bitcoin’s transaction capabilities and make it usable for large-scale international trade.
assignment
Despite his optimistic outlook, Van Eck acknowledged several risks that could hinder Bitcoin's growth. One major concern is the huge energy demands of future Bitcoin mining, which could necessitate new innovations in chip design and energy production.
Additionally, as Bitcoin's inflation rate declines, transaction fees will become miners' main source of income, which will require them to operate sustainably. The company also highlighted that other cryptocurrencies and potential technological advancements pose competitive threats to Bitcoin.
Additionally, coordinated efforts by governments around the world to ban or regulate Bitcoin could have a significant impact on Bitcoin's adoption and value, depending on the actions of each government.
VanEck's in-depth analysis presents a compelling vision for Bitcoin's future and highlights its potential to become a cornerstone of the global financial system. While significant challenges remain, the study highlights the transformative impact Bitcoin and its layer-2 solutions could have on international trade and finance by 2050.
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