Zinger Key Points
- VanEck highlights Bitcoin's potential as a reserve asset, projecting central banks might hold 2.5% of their reserves in BTC.
- The report foresees Bitcoin settling 10% of global international trade and 5% of domestic trade by 2050.
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Bitcoin BTC/USD could skyrocket to $2.9 million by 2050, according to a new forecast from investment firm VanEck.
What Happened: The report, titled “Bitcoin 2050 Valuation Scenarios: Global Medium of Exchange and Reserve Asset”, presents a base case valuation of $2.9 million, with bear and bull cases of $130,000 and $52 million respectively.
VanEck’s digital assets research team, led by Matthew Sigel and Patrick Bush, based their projections on Bitcoin potentially becoming a key player in the global financial system over the next few decades.
Their base case scenario envisions Bitcoin being used to settle 10% of international trade and 5% of domestic trade worldwide by 2050.
“By 2050, we see bitcoin solidifying its position as a key international medium of exchange, ultimately becoming one of the world’s reserve currencies,” the report states. “This projection is rooted in the anticipated erosion of trust in current reserve assets.”
The analysts believe that emerging Layer-2 scaling solutions, “the primary barrier to its widespread adoption,” will be crucial in overcoming Bitcoin’s current limitations.
In the base case scenario, VanEck projects central banks could hold 2.5% of their assets in Bitcoin by 2050. Using assumptions about global growth, investor demand, and Bitcoin’s velocity, they arrive at the $2.9 million price target.
“Applying our existing framework for valuing Ethereum L2s, we estimate that Bitcoin L2s could collectively be worth $7.6T, approximately 12% of BTC’s total value,” the analysts added.
VanEck’s report delves into potential shifts in the global monetary landscape that could favor Bitcoin’s ascendance.
They project a decline in the relative global GDP of current economic leaders such as the U.S., the EU, the UK and Japan, coupled with diminishing confidence in current reserve currencies.
Why It Matters: While presenting an optimistic outlook, VanEck’s analysis also outlines several key risks to their Bitcoin thesis.
These include the sustainability of Bitcoin mining, potential community schisms, government regulation and competition from other cryptocurrencies.
“If Bitcoin cannot become an important medium of exchange because adequate scaling is not completed, our core thesis for its meteoric rise will be broken,” the report cautions.
VanEck emphasizes that their projections are based on complex simulations and are for illustrative purposes only. “The information, valuation scenarios and price targets presented on any digital assets in this blog are not intended as financial advice, a recommendation to buy or sell these digital assets, or any call to action,” the report states.
The firm also notes that they currently hold positions in Bitcoin.
VanEck’s analysis provides a detailed and thought-provoking look at Bitcoin’s potential long-term trajectory.
While acknowledging the many variables and risks that could impact Bitcoin’s adoption and valuation over the coming decades, the report presents a compelling case for Bitcoin’s potential role as a major player in the future global financial system.
What’s Next: This report sets the stage for further discussions at Benzinga’s Future of Digital Assets event on Nov. 19, where industry experts will delve deeper into the evolving landscape of digital currencies and their impact on the global economy.
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