Two VanEck executives tried to calculate the assumption bitcoin priceif it became a global reserve asset. Their results are quite surprising.
VanEck executives, Eric Fine and Natalia Gurushina have created a framework for valuing gold and bitcoin if they become global reserve assets. Their model predicts the highest price of bitcoin at $ 4.8 million and $ 31,000 per ounce of gold.
Bitcoin as a global reserve asset
Is it possible for the price of bitcoin to climb to $ 4.8 million? VanEck seems to think that can happen.
Wednesday’s blog post by VanEck, head of active debt, Erik Fine, and chief economist Natalie Gurushiny, set a target price of $ 4.8 million for bitcoin if this peak kryptoměna became a global reserve asset.
“We have created a simple framework for valuing gold and Bitcoin”
These are the words of an article explaining how the pair reached $ 4.8 million – dividing the global money supply by 21 million, which is the total number of bitcoins that will ever exist.
By performing this calculation using global M0 (liquid money that can be used for immediate expenses), we obtain a target price of $ 1.3 million for one BTC coin. However, using the combined total money supply M0 and M2 that economists prefer, we get the highest price forecast of US $ 4.8 million.
And what about the price of gold?
The article also sets an average price target of $ 31,000 per ounce of gold using the same methodology. VanEck executives point out that the rising value of bitcoin appears to be much higher than in the case gold, but with the proviso that both forecasts should be adjusted downwards by the degree to which some of them are unlikely to become a global reserve asset. The article states:
“For example, an investor who sees a 10% chance of gold becoming a reserve asset might say that our ‘extreme scenario’ of $ 31,000 per ounce represents a practical price target of $ 3,100 per ounce.”
Nevertheless (even with such low chances) VanEck’s calculations would still predict the current valuation of bitcoin at $ 480,000, with a 10% chance that the asset will become a global reserve currency in the future.
Conclusion
VanEck is not the only investment company to make extreme bitcoin price forecasts. In January, Cathie Wood’s ARK Invest research report predicted that bitcoin could reach $ 1 million by the end of 2030. However, other companies were significantly more skeptical about the potential of bitcoin. For example, in February, JPMorgan analysts estimated that the current “fair value” of bitcoin was only $ 38,000, with a long-term target price of $ 150,000.
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