- VanEck thinks that the price of one Bitcoin could exceed $4 million.
- The investment firm posits that the crypto will have to topple the dollar as the global reserve currency.
- VanEck has skin in the game with a stake in its Bitcoin ETF that was launched in 2021.
Leading American investment firm, VanEck has hypothesized an over 100x leap in the price of the largest cryptocurrency in the world. The firm’s analysis used several models to arrive at the conclusion that could pass as one of the biggest predictions of Bitcoin prices.
Over $4 Million For One BTC
At the end of March, VanEck released a post titled “How One Bond Manager Values Gold and Bitcoin” where they made scintillating predictions for the future of the assets. Written by Eric Fine, the company’s Head of Active EM Debt, and Natalia Gurushina, Chief Economist in charge of Emerging Markets Fixed Income Strategy, they predicted that the price of a single Bitcoin could reach $4.8 million.
Their hypothesis hinged on the argument that conflict in Ukraine and sanctions on Russia have reduced the appetite for hard currencies as reserve assets. VanEck imagined a scenario where Bitcoin or gold toppled the dollar as the reserve currency in the world. To value Bitcoin in the event of becoming the world’s reserve currency, VanEck used a framework to arrive at that conclusion.
For Bitcoin to achieve this, VanEck’s executives used the M2 framework. “We calculate the global price for BTC, namely M0 (and M2) divided by BTC, globally. But the concept is the same: The money liability divided by the reserve, or potential reserve asset,” they wrote.
They acknowledged beginning their hypotheses with highly unlikely scenarios that may or may not happen in their entirety. They argued that if gold and Bitcoin do not assume the role of reserve currency, existing emerging national currencies like the Chinese yuan might become the new reserve currency of the world.
The Critics
According to VanEck, M0/M1 is interpreted as narrow money and is used to measure the supply of money in the economy. Often seen as highly liquid, it is easily accessible while M2 is considered broad and has low liquidity. Leveraging on the MO framework, the value of 1 BTC would place Bitcoin at $1,300,000 per asset while M2 gives the asset a value of $4,800,000 per coin.
Some Bitcoin critics have poked holes in the theory that the asset would become the reserve currency of the world in the future. St. Louis Federal Reserve President James Bullard claimed that Bitcoin does not pose a threat to the dollar because of the historical dislike of trading multiple currencies.
“I just think for Fed policy, it’s going to be a dollar economy as far as the eye can see – a dollar global economy really as far as the eye can see – and whether the gold price goes up or down, or the bitcoin price goes up or down, doesn’t really affect that,” said Bullard to CNBC.
