Bitcoin (BTC) might increase by over 100 times, according to a worldwide investment manager, as hard currencies become less appealing 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 argue that if Bitcoin becomes widely used as a reserve asset, the upside is “potentially dramatic.”
According to VanEck, BTC’s price might reach $1.30 million in the future. VanEck said that this scenario will play out when the extremely liquid world money supply, M0, is split by the current quantity of the flagship cryptocurrency.
When the less liquid global money supply, M2, is split by the total quantity of the flagship crypto asset, Bitcoin’s price might reach $4.80 million, according to VanEck.
M0 refers to the extremely liquid money supply, which includes both notes and coins stored inside and outside the banking system. M2 is the less liquid money supply, which includes money kept outside of the banking system such as checking and savings accounts, as well as 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.”
BTC is now trading at $45,257, and to fulfill VanEck’s price forecasts, it would need to increase by more than 2,700% to more than 10,500%.
The freeze of Russia’s foreign currency reserves as a result of its invasion of Ukraine, according to VanEck, will make alternatives like gold and Bitcoin more appealing as national reserve assets.
“Precious metals are the original reserve asset, but cryptocurrencies are a possible addition/replacement/portion.”
VanEck, on the other hand, cautions that the forecasts are “extreme” and advises investors to temper their expectations.
The ‘prices’ established in this extreme scenario, in which gold or Bitcoin becomes the reserve asset, must clearly be adjusted downward — they are only a starting point.
At the very least, investors should calculate a subjective likelihood for the result. Alternatively, they could decide on the scope of the outcome: will gold or Bitcoin be the exclusive reserve assets, or will it be shared with other assets?
Join CoinCu Telegram to keep track of news: https://t.me/coincunews