VanEck outlined an ambitious scenario in which Bitcoin (BTC) could reach a staggering $2.9 million per coin by 2050 under a “base case scenario” in its latest research report.
According to the report — authored by the firm’s head of digital assets, Matthew Sigel, and senior investment analyst Patrick Bush — the projected valuation hinges on Bitcoin’s adoption as a global medium of exchange and a reserve asset, which could potentially revolutionize the international financial system.
10% of global trade
The firm’s base scenario projects Bitcoin could reach $2.9 million per coin. Meanwhile, BTC is projected to hit a minimum of $130,314 in a bear scenario — while a bull scenario sees the price soaring to $52.4 million per coin.
VanEck’s base case scenario posits that Bitcoin could handle 10% of the world’s international trade and 5% of domestic trade by 2050. The firm also predicted that central banks will hold 2.5% of their assets in BTC.
This scenario, based on global growth projections and the velocity of money, suggests a potential Bitcoin price of $2.9 million, resulting in a total market capitalization of $61 trillion.
The report emphasized that Bitcoin’s scalability issues, historically a significant barrier to its adoption, will be addressed by emerging Bitcoin Layer-2 (L2) solutions. These solutions could enable Bitcoin to support a global financial system that better serves the needs of the developing world.
Transforming the monetary system
VanEck’s analysis delved into current trends in the International Monetary System (IMS), projecting a shift away from traditional reserve currencies like the US Dollar, Euro, British Pound, and Japanese Yen.
The report attributed the potential shift to declining global GDP shares of these economic leaders and diminishing confidence in their currencies due to deficit spending and geopolitical decisions. It added that businesses and consumers worldwide are likely to recognize the endemic flaws of alternative fiat currencies as inflation and devaluation continue to climb.
According to the report, this will ultimately highlight Bitcoin’s potential as a neutral medium of exchange with immutable property rights and a predictable monetary policy.
VanEck outlined several critical areas where Bitcoin could transform the IMS. It said that Bitcoin’s immutable monetary policy and decentralized nature could position it as a reliable reserve currency, similar to gold, but with greater flexibility and efficiency.
L2 solutions, such as the Lightning Network and various sidechains, are poised to scale Bitcoin’s transaction capabilities, making it viable for large-scale international trade.
Challenges
Despite the optimistic outlook, VanEck acknowledges several risks that could impede Bitcoin’s growth. One of the main concerns is the immense rising energy demands of future Bitcoin mining, which could potentially require new innovations in chip design and energy production.
Additionally, as Bitcoin’s inflation rate decreases, transaction fees must become a primary revenue source for miners and allow them to operate sustainably. The firm also highlighted that other cryptocurrencies and potential technological advancements pose competitive threats to Bitcoin.
Furthermore, coordinated efforts by governments worldwide to ban or regulate Bitcoin could significantly impact its adoption and value depending on the approach various governments take.
VanEck’s detailed analysis presents a compelling vision of Bitcoin’s future, emphasizing its potential to become a cornerstone of the global financial system. While significant challenges remain, the research highlights the transformative impact that Bitcoin and its Layer-2 solutions could have on international trade and finance by 2050.
