VanEck Sees Bitcoin Hitting $2.9M by 2050 – but a Lot Has to Happen First

Asset manager VanEck reported that by 2050, Bitcoin could account for 10 percent of international trade and 5 percent of domestic trade profits, with central banks holding it as a reserve asset.

The company noted that it will play a key role in overcoming the scaling issues of Bitcoin layer-2 networks and enabling the use of BTC as a medium of exchange.

The report noted that there are risks to Bitcoin’s growth, such as increasing energy demand, intense pressure from governments, and competition with other digital assets.

VanEck, the asset manager that issues the spot Bitcoin {{BTC}} and Ethereum {{ETH}} ETFs, says the price of BTC could reach $2.9 million by 2050 if some major hurdles are overcome.

Bitcoin will become an indispensable part of the international monetary system in the coming decades as rising geopolitical tensions and swelling debt servicing costs erode the current system, VanEck hypothesizes in his Wednesday report.

“As we look around the world right now, we see tremendous economic imbalances, increasing distrust of existing institutions, and an ongoing anti-globalization movement,” Matthew Sigel, head of digital asset research at Van Eck and one of the report’s authors, told CNBC in an interview on Wednesday.

“We think many of these distortions are due to a massive misallocation of capital since the global financial crisis, with G7 governments abusing the printing press and spending borrowed money on impossible targets,” Sigel explained.

“Bitcoin … is the single greatest hedge against this increasing financial recklessness,” Sigel said.

According to the base scenario in the report, BTC will become an important medium of exchange in local and global trade, representing 10% of international trade volume and 5% of GDP.

Meanwhile, as a global reserve asset, it will gain against the four major foreign reserve currencies, namely the US dollar, euro, British pound and Japanese yen, and its weight in international currency reserves will reach 2.5%.

Bitcoin could gain reserve currency status (VanEck)

If things go as VanEck predicts, bitcoin’s price will increase 44-fold, gaining 16% annually from its current price of just under $65,000, and its market cap will skyrocket to $61 trillion.

The report noted that the proliferation of layer-2 networks will play a key role in overcoming the bottlenecks and scaling issues of the Bitcoin blockchain that prevent BTC from becoming a useful medium of exchange. The sector could be worth a total of $7.6 trillion by 2050, applying the same valuation framework applied to Ethereum layer-2s.

VanEck also warned about potential risks that could hinder Bitcoin’s expansion.

The story continues

The increasing energy demand of miners will require innovation, while revenue from transaction processing will need to increase significantly to replace the decreasing mining rewards (which are cut in half every four years) to incentivize miners to maintain the network. The concerted efforts of governments around the world to restrict or ban bitcoin are also a threat.

Other risks highlighted in the report include competition from other cryptocurrencies and excessive control by large financial institutions.