US Bitcoin reserve could slash national debt 35% by 2049: VanEck

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As a seasoned researcher with over two decades of experience in financial markets and technology, I find the proposition of a Bitcoin reserve by the US government intriguing, to say the least. The potential for such a move to significantly reduce the national debt is indeed captivating, especially when considering the exponential growth trajectory Bitcoin has shown in recent years.

If Senate Bill proposed by Cynthia Lummis is implemented and the United States sets aside a reserve of one million Bitcoins, financial advisory firm VanEck predicts that the nation’s debt could decrease by approximately 35% over the next 24 years.

According to VanEck’s calculations, Bitcoin (BTC) is projected to grow by approximately 25% per year on average, reaching a total value of around $42.3 million by the year 2049. At the same time, it is expected that the US national debt will rise at an annual rate of 5%, starting from $37 trillion in early 2025 and increasing to $119.3 trillion over the same period.

According to VanEck’s digital asset researchers, Matthew Sigel and Nathan Frankovitz, the reserve could potentially account for around 35% of the country’s total national debt by the year 2049, effectively reducing approximately $42 trillion worth of obligations or liabilities.

In a positive outlook, the experts predict that Bitcoin’s Compound Annual Growth Rate (CAGR) of 25% will begin from a value of $200,000 in the year 2025. As Bitcoin is currently being traded at around $95,360, it would have to increase significantly more than double its current price to meet the starting point suggested by VanEck.

If Bitcoin’s value reached $42.3 million, it would account for roughly 18% of the global financial assets. This is a significant increase from its current representation of approximately 0.22% within the present $900 trillion market.

The proposed concept of a Bitcoin reserve by Donald Trump’s upcoming administration has sparked a surge in Bitcoin prices to more than six figures, yet Senator Lummis’ bill remains unaddressed in either the Senate or the House.

Earlier this month, Jack Mallers, the creator and leader of Strike, suggested that during his inauguration, former President Trump might issue an executive order, which would classify Bitcoin as a national reserve asset.

As a researcher, I propose considering an innovative strategy under the Lummis bill, which allows us to reallocate the 19,810 BTC we currently hold from asset seizures. The remaining 801,900 BTC could potentially be acquired through Emergency Support Functions or by strategically selling a part of our $455 billion gold reserves and investing the proceeds in Bitcoin. This approach would not involve money printing or the use of taxpayer funds, as suggested by VanEck.

The increase in Bitcoin and Ether (ETH) usage by U.S. states, institutions, and corporations could strengthen the projected compound annual growth rate (CAGR) of companies that issue Bitcoin and Ether exchange-traded funds, according to Sigel and Frankovitz.

Members of the BRICS alliance, comprising Brazil, Russia, India, China, and South Africa, have the potential to influence Bitcoin’s value and foster its use more extensively as a currency, according to Sigel in a Dec. 21 post on Reddit.

They pointed out that it’s quite likely that Bitcoin could become a common currency for international trade among nations aiming to bypass the escalating US dollar sanctions.

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2024-12-23 04:06