In a new July 24, 2024 report from VanEck, the investment firm’s digital assets research team, led by Matthew Sigel and Patrick Bush, makes an extraordinary prediction: Bitcoin could rise to a value of $52.38 million per coin by 2050. most bullish scenario. The analysisTitled “Bitcoin 2050 Valuation Scenarios: Global Medium of Exchange and Reserve Asset,” it paints a picture of Bitcoin transforming into a cornerstone of the global monetary framework, functioning as both a major international medium of exchange and a reserve currency.
How Bitcoin Could Reach $52.38 Million
The report elaborates on Bitcoin’s potential trajectory and predicts that it will become a primary reserve currency by mid-century. “By 2050, we see bitcoin solidifying its position as a major international medium of exchange and ultimately becoming one of the world’s reserve currencies,” the researchers said. This scenario is based on the expectation that current confidence in traditional reserves will erode, mainly due to unsustainable fiscal policies and geopolitical decisions of current economic leaders.
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VanEck predicts that solving Bitcoin’s scalability issues through emerging Layer-2 solutions will significantly improve its functionality, making it an attractive option in the financial systems of developing countries. “The combination of Bitcoin’s immutable property rights and sound money principles with the enhanced functionality of L2 solutions could enable the creation of a global financial system that can better meet the needs of developing countries,” Sigel and Bush argue.
Within their analysis of the International Monetary System (IMS), VanEck underlines the declining relevance of the major currencies – USD, EUR, JPY and GBP – in global trade. They foresee a reduction in their collective share of cross-border payments from 86% in 2023 to 64% in 2050. “This opens significant opportunities for Bitcoin to become a major alternative for international trade,” the report suggests.
The base case predicts that Bitcoin will reach a valuation of $2.9 million per coin by 2050. This prediction is anchored in the cryptocurrency’s expected role in controlling a portion of global trade – 10% of international and 5% of domestic trade – combined with a significant allocation as a central bank reserve.
“This scenario would result in central banks holding 2.5% of their assets in BTC, which would contribute to a total market capitalization of $61 trillion.” In this view, Bitcoin is expected to account for 1.66% of global financial assets, capturing the expected growth in global trade and investment demand.
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However, the bull case projects. The bull case scenario presented by VanEck paints an even more optimistic outlook in which Bitcoin’s integration into the global economy is of much greater importance. The report suggests that Bitcoin could facilitate 20% of global international trade and 10% of domestic trade volume by 2050.
In this scenario, Bitcoin comprises a whopping 29.79% of global financial assets. Notably, this scenario implies that almost 99% of Bitcoin’s supply would be removed from circulation, attributed to the storage of value properties, leaving only about 210,000 BTC in active circulation.
The report also highlights existing limitations in Bitcoin’s ability to function as a medium for international trade, particularly its current transaction processing capacity and lack of support for complex smart contracts. However, VanEck is optimistic about future improvements, suggesting that “the continued development of Bitcoin’s infrastructure, especially through Layer-2 solutions, will gradually increase its functionality and appeal as a robust, decentralized financial system.”
Concluding the analysis, VanEck sees Bitcoin not only as a financial instrument, but also as a transformative economic force that redefines money in a global context. “Bitcoin applies constitutional restrictions on money and represents a system created by the people, for the people, and could serve as the ultimate check against the often arbitrary financial powers of the state,” the report reflects.
At the time of writing, BTC was trading at $64,210.
Featured image created with DALL·E, chart from TradingView.com
