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A global investment manager is predicting Bitcoin (BTC) could surge by over 100 times as hard currencies become less attractive reserve assets.
In a new blog post, VanEck emerging markets fixed income strategy chief economist Natalia Gurushina and head of active emerging markets debt Eric Fine say the upside for Bitcoin is “potentially dramatic” were it to be widely adopted as a reserve asset.
VanEck says that Bitcoin’s price could one day hit $1.30 million. According to VanEck, this projection would play out when the highly liquid global money supply, M0, is divided by the flagship cryptocurrency’s existing supply.
When the less liquid global money supply, M2, is divided by the flagship crypto asset’s total supply, VanEck says that Bitcoin’s price could hit $4.80 million.
M0 is the highly liquid money supply and consists of the physical currency, both notes and coins, held inside or outside of the banking system. M2 is the less liquid money supply and consists of money held outside the banking system such as checking deposits, savings deposits and money market securities.
“The implied price of Bitcoin using the same aggregate M0 that we used for gold is around $1,300,000 per coin.
The implied price of Bitcoin using global M2 is $4,800,000 per coin.”
Bitcoin is trading at $45,257 at time of writing and would need to appreciate by between more than 2,700% and over 10,500% to reach VanEck’s price projections.
According to VanEck, the freezing of Russia’s foreign currency reserves following its invasion of Ukraine is what will make alternatives such as gold and Bitcoin more attractive as national reserve assets.
“Precious metals are the original reserve asset, but cryptocurrencies are a possible addition/replacement/portion.”
VanEck, however, warns that the projections are “extreme” and urges investors to consider lowering expectations.
“The ‘prices’ generated in this extreme scenario in which either gold or Bitcoin become the reserve asset obviously need to be adjusted downward – they are just a starting point.
Investors should, at least, determine a subjective probability for the outcome. Or they should choose an extent for the outcome: are gold or Bitcoin going to be the sole reserve assets, or will that status be shared with other assets?”
