VanEck predicts Bitcoin "extreme price": Could reach $4.8 million if it becomes global reserve asset
The U.S. asset management company VanEck is very optimistic about the future value of Bitcoin. The company believes that the potential for Bitcoin to rise is twice that of gold. If Bitcoin were to become a global reserve asset, its price could reach $4.8 million per coin. However, before that happens, VanEck believes that the Chinese yuan is more likely to become the preferred reserve asset.
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VanEck's Emerging Markets Bond Portfolio Manager, Eric Fine, and economist Natalia Gurushina published an article on March 30th. The article explicitly stated that economic sanctions on Russia could alter the reserve currency system. From a currency perspective, they attempted to quantify the impact on gold and Bitcoin as potential reserve assets.
VanEck's analysis found that in terms of global M0 and M2 values, if Bitcoin were to replace fiat reserves, its intrinsic value would range between $1.3 million and $4.8 million.
Similarly, when assessing the price per ounce of gold, Fine and Gurushina believe that the M0 price prediction for gold is $31,000, significantly lower than Bitcoin's $1.3 million, due to "many central banks having little to no gold reserves," with a forecast of $105,000 per ounce of gold for M2.
One colleague’s view. Interesting analysis. https://t.co/Ua7vTqPU1w
— Jan van Eck (@JanvanEck3) March 31, 2022
According to investment database Investopedia, the monetary base (M0) is the total amount of physical currency and coins in circulation in the hands of the public and in commercial bank deposits, as well as the reserves held by central banks.
M1 is a narrow measure of the money supply that includes physical currency, reserves, checking accounts, and other checkable deposits. M2 is a broader calculation of the money supply, including all elements of M1 plus savings deposits, money market securities, mutual funds, and other time deposits. Economists generally focus on the broader measures of money supply, M1 and M2, rather than the monetary base, M0.
This report by VanEck points out that the situation in Russia could lead to global central banks altering their reserve compositions to some extent. The most impacted would be the US dollar, followed by the Euro and Yen, shifting towards holding other reserves such as the Chinese Yuan, although China still has capital controls. In addition to currencies and gold, reserve asset choices also include real estate, stocks, and even emerging market currencies.
Therefore, the report emphasizes that the extreme price of Bitcoin is evaluated based on gold's foundation.
This article is authorized to be reprinted from Horizon News Network
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