Two VanEck executives have calculated the implied price of Bitcoin if it were to become the global reserve asset—with some surprising results.
Key Takeaways
- VanEck has estimated a top price of $4.8 million for Bitcoin if it were to become a global reserve asset.
- The firm's model also predicts a target of $31,000 per ounce of gold under similar circumstances.
- VanEck also stated that both predictions would need to be adjusted downwards by the improbability of either becoming a global reserve asset.
VanEck executives Eric Fine and Natalia Gurushina have created a framework for valuing gold and Bitcoin if they were to become global reserve assets. Their model predicts a top price of $4.8 million for Bitcoin and $31,000 per ounce of gold.
Bitcoin As A Global Reserve Asset
Can Bitcoin soar to $4.8 million? VanEck seems to think it’s possible.
A Wednesday blog post from VanEck’s Head of Active EM Debt Eric Fine and Chief Economist Natalia Gurushina has given Bitcoin a price target of $4.8 million if the top cryptocurrency became the global reserve asset.
“We built a simple framework to value gold and Bitcoin,” the article reads, explaining how the pair reached the $4.8 million figure by dividing the global money supply by 21 million, the total number of Bitcoins that will ever exist.
Performing this calculation using the global M0 (liquid money that can be used for immediate spending) gives a price target of $1.3 million per Bitcoin. However, using the combined total of M0 and M2 money supplies that economists favor results in a top price prediction of $4.8 million.
The article also gives an average price target of $31,000 per ounce of gold using the same methodology. The VanEck executives point out that the upside of Bitcoin appears much higher than that of gold, but with the caveat that both predictions would need to be adjusted downwards by the improbability of either becoming the global reserve asset. The article states:
"For example, an investor who sees a 10% chance of gold becoming the reserve asset might say that our ‘extreme scenario’ price of $31,000 per ounce represents a practical price target of $3,100 per ounce."
Still, even with such low odds, VanEck’s calculations would still predict a current Bitcoin valuation of $480,000, given a 10% chance that the asset will become the global reserve currency in the future.
VanEck is not the only investment firm to give extreme predictions for the price of Bitcoin. In January, a research report from Cathie Wood’s ARK Invest forecasted that Bitcoin could hit $1 million by the end of 2030.
However, other firms have been more skeptical about Bitcoin’s potential. In February, analysts at JPMorgan estimated that the current "fair value" for Bitcoin is only $38,000 while giving a longer-term price target of $150,000 for the asset.