Investment management firm VanEck has outlined a scenario in which bitcoin (BTC) could reach $2.9 million per coin by 2050.
This forecast is based on their “base case scenario,” which envisions bitcoin becoming a key international medium of exchange and ultimately growing to be one of the world’s reserve currencies.
The Road to $2.9 Million
VanEck’s report presents three distinct scenarios for bitcoin’s price by 2050. The base one predicts a price of $2.9 million per BTC, while a bear scenario projects a minimum of $130,314, and a bull forecast sees the price soaring to $52.4 million.
Under this case, VanEck envisions bitcoin handling 10% of the world’s international trade and 5% of domestic trade by 2050. The firm predicts central banks will hold 2.5% of their assets in BTC, with 85% of BTC effectively removed from circulation as investors seek its store-of-value properties.
This scenario also predicts a total market capitalization of $61 trillion for Bitcoin, with Layer-2 (L2) solutions, such as the Lightning Network, being collectively worth $7.6 trillion.
According to VanEck’s report, the anticipated erosion of trust in current reserve assets will play an important role in bitcoin’s rise. This is based on growing concerns over these currencies, fueled by deficit spending and geopolitical developments.
VanEck’s report envisions BTC becoming a significant component of the International Monetary System (IMS), potentially replacing traditional reserve currencies such as the US Dollar, Euro, British Pound, and Japanese Yen.
The report states that bitcoin’s immutable monetary policy and decentralized nature could position it as a reliable reserve currency, similar to digital gold. Additionally, emerging Layer-2 solutions like the Lightning Network are expected to address scalability issues, making bitcoin viable for large-scale international trade.
The report also notes the Gresham’s Law effect, where increasing bitcoin’s value could lead central banks and long-term investors to boost their holdings, thereby reducing the floating supply and further driving up the price.
Challenges and Risks
Despite the optimistic projection, VanEck acknowledges several risks that could prevent bitcoin’s growth. One major concern is the rising energy demand associated with future mining, which could necessitate innovations in chip design and energy production. Additionally, as bitcoin’s inflation rate decreases, transaction fees must become a primary revenue source for miners to ensure their sustainable operation.
The report also highlights potential competitive threats from other cryptocurrencies and technological advancements. Furthermore, coordinated efforts by governments worldwide to ban or regulate bitcoin could significantly impact its adoption and value, depending on the regulatory approaches taken.