Bitcoin Reserve Could Significantly Reduce US National Debt, VanEck Suggests

Asset management firm VanEck has suggested that the United States could significantly reduce its national debt by establishing a Bitcoin reserve

Asset management firm VanEck has proposed that the United States could significantly reduce its national debt by establishing a Bitcoin reserve, in line with a bill proposed by Senator Cynthia Lummis.

The firm’s analysis predicts that Bitcoin’s value could reach $42.3 million per coin by 2049, creating an opportunity for the U.S. to offset $42 trillion in liabilities.

Bitcoin’s Potential Economic Impact

VanEck’s estimate assumes Bitcoin’s price will grow at a compounded annual growth rate (CAGR) of 25%, starting from a hypothetical $200,000 valuation in 2025. With Bitcoin currently trading at around $95,360, this would require a more than twofold increase in the cryptocurrency’s value to align with the firm’s projections.

By 2049, Bitcoin’s market capitalization could represent 18% of global financial assets, compared to its current 0.22% share of the $900 trillion market. If these projections hold true, a 1-million-bitcoin reserve could reduce the national debt by 35%, bringing down liabilities from a projected $119.3 trillion to $77.3 trillion.

Under Senator Lummis’ proposed legislation, the U.S. government could allocate its existing 198,100 Bitcoin, acquired through asset seizures, towards the reserve. The remaining 801,900 Bitcoin needed could be financed through a combination of selling gold reserves, currently valued at $455 billion, or leveraging Emergency Support Functions. This strategy would avoid reliance on money printing or taxpayer funds, according to VanEck’s report.

Global Implications and Market Trends

VanEck highlighted potential influences on Bitcoin’s adoption at both domestic and international levels. Increased adoption by U.S. institutions and corporations could drive the value of cryptocurrency, as could actions by the BRICS nations. The alliance’s exploration of Bitcoin as a settlement currency for global trade could further impact its price trajectory.

At the same time, speculation about the new U.S. government administration’s policy on Bitcoin has also energized the market. Apparently, during Donald Trump’s presidency, Bitcoin was planned to be proclaimed a reserve currency right at the executive order level, which is in line with Lummis’s plans

VanEck’s outlook is based on an optimistic scenario where Bitcoin achieves sustained growth amid increasing adoption. While the targets set are reasonably aggressive, the company concedes that there are still great barriers to overcome, such as the rate of regulatory discretion available and market concentration.

Once these obstacles are more or less conquered, the use of Bitcoin as a reserve asset should be a crucial milestone for the United States national debt management, and, on the other hand, it should completely alter the economic order of the whole world.