VanEck expects bitcoin to be worth $4.8 million as a world reserve currency – BTC Direct

The American investment firm VanEck believes that bitcoin has twice the upside potential of gold and can reach a price of 4.8 million dollars (4.32 million euros). For this, bitcoin must become the world reserve currency and that is a hurdle that cannot be taken one, two, three.

VanEck acknowledges it’s a big “but” and thinks the Chinese yuan has a better chance of playing this role in the future. Authors Eric Fine and Natalia Gurushina of VanEck shared this bold prediction in a Thursday published writing† In the piece, Fine and Gurushina compare the price implications for both gold and bitcoin in a scenario where they act as backers for government money.

Bitcoin price from 1.3 to 4.8 million dollars

VanEck’s analysis shows a bitcoin price of 1.3 million dollars (1.17 million euros) to 4.8 million dollars (4.32 million euros). The lowest prediction in this bandwidth is based on a bitcoin as the monetary base (M0). M0 defines the money supply as all the currencies in circulation plus commercial bank balances. However, this way of measuring the money supply is not popular, because it does not include certain things that play a major role in the economy today.

The higher forecast of 4.8 million dollars (4.32 million euros) comes from the more usual M2 definition of the money supply. This consists of the same basis as M0 with all credits and loans that can be converted into cash within 1 year. It is a broader definition of money yielding a larger money supply.

Dominant position of dollar in danger

In the analysis, Fine and Gurushina also discuss recent geopolitical developments that have made Russia, among others, think about their dollar and euro holdings. After invading Ukraine, large amounts of Russia’s reserves have been frozen. This has led Russia to consider selling their oil and gas only for rubles or immediately converting the proceeds into hard money.

With hard money you have to think of gold, bitcoin and other commodities. This could create a trend that could “endanger” the dollar’s long-term dominance. Which potentially has major implications for the power of the United States. Fine and Gurushina see the Chinese yuan as the prime candidate for taking over the dollar’s position as a world reserve currency in the event of a changing of the guard. “Central banks and private parties are likely to opt for a more diverse mix of reserves, at the expense of the dollar, euro and yen.” According to Fine and Gurushina in their research for VanEck.

Take the predictions with a grain of salt

Fine and Gurushina are warning investors to take the forecasts with a grain of salt. In the scenarios they discuss, both bitcoin and gold make it to world reserve currency status. A position that many other assets are also contenders for. The most likely scenario is that parties opt for a mix of gold, bitcoin, real estate and other commodities.

You should also bear in mind that VanEck has an interest in bitcoin developing into a world reserve currency. This is partly because of the Bitcoin Strategy exchange-traded fund (ETF) and that it has an application for a gold and bitcoin mining ETF with the American financial regulator. The better bitcoin does, the more interest there is likely to be for VanEck’s investment products.

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