It’s been a bumpy ride for Bitcoin (BTC) hodlers this year, but there may be light at the end of the tunnel.
According to investment firm VanEck, bitcoin not only has double the upside of gold but it could also rise to a whopping $4.8 million in the event it ended up as de facto global reserve asset.
While that may seem like lofty goal, it’s not impossible – especially when you consider how quickly the cryptocurrency has gained in value and popularity in the past.
The analysis done by VanEck’s Head of Active Emerging Markets Debt Eric Fine and Chief Economist Natalia Gurushina has brought to light the possible price drifts for gold and bitcoin if either one of them were to be used as a support for global currency controls.
While there is a big ‘if’ in this claim, the Chinese Yuan is seen as a significant competitor in the race by the analyst who have shed some much-needed light on the matter.
It’s worth noting that while it may not be as widely used as the greenback or Euro, Yuan is gaining ground rapidly. This makes it an important player in the global economy.
The Yuan is particularly important in Asia, where it is becoming the dominant currency. This gives China a lot of control over the region, and makes it an important player on the global stage. As Asia continues to grow, the Yuan will only become more important.
VanEck’s Implied Price for Gold and BTC
VanEck’s analysts set out to answer a simple question in their report: what would bitcoin be worth if it became the global reserve currency? In order to answer this question, they first had to calculate the “global” price of bitcoin. This was done by taking the total supply of BTC and dividing it by the total global money supply (M2). The results were ‘dramatic.’ If Bitcoin were to become the global reserve currency, its price would range from $1.3 million to $4.8 million.
The VanEck team says they applied the same concept to arrive at potential prices per ounce for gold given the yellow metal, like bitcoin, has a finite supply.
“The bottom-line is that the upside for gold and Bitcoin is potentially dramatic. Specifically, the framework estimates gold prices of around $31,000 per ounce and potential Bitcoin prices of around $1,300,000 per coin.”
VanEck’s report also notes that BTC’s price per coin based on the M2 assessment suggests a price of $4.8 million per coin if BTC succeeds in becoming the global reserve asset. For gold, the price jumps by more than 230% to around $105.000/oz.
According to the report, the global reserve system may have changed significantly following sanctions imposed on Moscow after its brutal invasion of Ukraine.
Russia said last week that it is considering accepting BTC as payment for its oil and gas exports.
“Central banks are likely to change their reserve mix to the detriment of dollars (and euros and yen) and the enhancement of something else, to one extent or another. US, Eurozone, and Japanese sanctions on the Central Bank of Russia essentially “disappeared” Russia’s dollar, euro, and yen reserves. As a result, some central banks—and private actors—will be diversifying their reserves.”
Price Action
At lat check, bitcoin was trading around $46,350, gaining 1.30% over the previous 24 hours. BTC’s intraday range: $44,403 – $46,616.
Gold last traded at $1,946.25/oz.
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