Key Takeaways
- VanEck predicts Bitcoin could reach $2.9 million per coin by 2050.
- Bitcoin layer 2 solutions could collectively be worth $7.6 trillion.
- Declining confidence in major fiat currencies may drive Bitcoin demand.
Investment manager VanEck predicts Bitcoin could reach a market capitalization of $61 trillion, translating to approximately $2.9 million per coin by 2050. This forecast stems from the anticipated demand for Bitcoin as collateral for trade settlements and as a reserve asset for central banks, according to their July 24 report.
VanEck envisions Bitcoin being used to settle 10% of global international trade and 5% of domestic trade by 2050. In this scenario, central banks could hold 2.5% of their assets in Bitcoin. The report highlights the importance of Bitcoin layer 2 (L2) scaling solutions, which could collectively be valued at around $7.6 trillion, or 12% of Bitcoin’s total value.
The report also suggests that Bitcoin’s rise will be fueled by the relative decline of major economies like the United States, the European Union, and Japan. Unconstrained deficit spending in these economies is expected to undermine confidence in their currencies, creating a demand for a stable medium of exchange with predictable monetary policy.
The report states:
Businesses and consumers worldwide are likely to recognize the endemic flaws of alternative fiat currencies.
The decreasing use of the euro and Japanese yen in international settlements is cited as an opportunity for Bitcoin. The euro’s share of cross-border payments has dropped from 22% in the mid-2000s to 14.5% today, while the yen has fallen from 6.2% to 5.4%.
VanEck warns of potential risks to Bitcoin adoption, such as issues with mining, scalability, and regulation. Despite gold’s established role as a global reserve asset, VanEck points out the logistical, security, and financial integration challenges that prevent a return to the gold standard.
