VanEck: Bitcoin Could Reach $4.8 Million If It Becomes a Global Reserve Asset

The U.S. investment firm VanEck believes that the appreciation potential of Bitcoin is twice that of gold. If it becomes a global reserve asset, the value of each Bitcoin may be as high as $4.8 million.

Of course, that's a big "if," and VanEck sees the yuan as a more likely competitor.

On March 30, Eric Fine, Head of Emerging Markets Debt at VanEck, and Natalia Gurushina, Chief Economist, wrote a high-level assessment of BTC. Both will have a price impact.

VanEck’s analysis found the implied price of BTC to be between $1.3 million and $4.8 million. The lower forecast is based on BTC as the base currency (M0), which investment database Investopedia says includes all of a currency’s circulating supply and bank deposits, but it’s not a metric economists generally focus on.

The higher forecast comes from the more common assessment of M2, which Investopedia believes measures the money supply, including all bank deposits in a currency and their ability to be converted into cash.

In their assessment of the price per ounce of gold, Fine and Gurushina prefer the M0 price forecast of $31,000 as a reliable starting point because “many central banks have little or no gold reserves.” With insufficient reserves, M2’s Forecasts are skewed towards a higher and less reliable $105,000 an ounce of gold.

Recent geopolitical turmoil has led Russia to consider alternative currencies, including bitcoin, for oil transactions with "friendly" partners China and Turkey.

The trend is likely to apply to more central banks, and the dollar's dominance could take a hit. Fine and Gurushina argue that the renminbi should be considered the first choice for a new reserve currency, but countries are likely to rebalance their reserves anyway.

"Central banks may alter their reserve mix, in a way that hurts the dollar (and the euro and yen) and boosts the value of other currencies...so some central banks - and the private sector - will diversify their reserves .”

The analysts urge readers to remember that these forecasts are just the starting point for investors to construct a framework for how to value gold and BTC in the extreme case of any single currency becoming a global currency. It notes that there are alternatives such as limited real estate, unlimited stocks, and even emerging market currencies that could play the role of gold or BTC.

VanEck has a presence in the crypto industry with its bitcoin futures exchange-traded fund (ETF), the Bitcoin Strategy ETF (XBTF), which has $30.1 million in total net assets. The company also recently filed with the U.S. Securities and Exchange Commission (SEC) to launch a new ETF that will focus on gold mining and crypto mining companies.

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