"US Bitcoin Reserve Could Slash National Debt 35% by 2049: VanEck"

Asset management firm VanEck stated that if the United States establishes a reserve of 1 million bitcoins according to the bill proposed by Senator Cynthia Lummis, the U.S. could reduce its national debt by 35% over the next 24 years.

VanEck stated that if the United States establishes a bitcoin reserve of 1 million BTC, as proposed by Senator Cynthia Lummis, the country could reduce its national debt by 35% over the next 24 years.

VanEck estimates that the compound annual growth rate (CAGR) of bitcoin will reach 25% by 2049, reaching $42.3 million, while the CAGR of U.S. national debt will reach 5%, increasing from $37 trillion at the beginning of 2025 to $119.3 trillion.

“This reserve would equate to 35% of the national debt by 2049, offsetting roughly $42 trillion in debt,” wrote Matthew Sigel, head of digital asset research at VanEck, and Nathan Frankovitz, an investment analyst, in a note on Dec. 20.

It is expected that U.S. national debt will increase alongside the growth of bitcoin reserves from 2025 to 2049. Source: VanEck

The "bullish" forecast assumes that the 25% CAGR for bitcoin will start from a price point of $200,000 in 2025. Bitcoin is currently trading at $95,360, needing to more than double to reach the starting point indicated by VanEck.

A rise in the price of bitcoin to $42.3 million would mean that it comprises about 18% of global financial assets—significantly higher than its current share of approximately 0.22% in today's $90 trillion market.

Projections for U.S. national debt and bitcoin reserve holdings, assuming a 25% CAGR for bitcoin. Source: VanEck

The concept of a bitcoin reserve was proposed by Donald Trump's new administration, which drove the price of bitcoin above six figures, but Senator Lummis's bill has yet to be considered by the Senate or the House of Representatives.

Earlier this month, Strike founder and CEO Jack Mallers claimed that Trump could issue an executive order on his first day in office, designating bitcoin as a reserve asset.

According to the Lummis bill, the U.S. could utilize the 198,100 BTC it already holds from asset seizures, while the remaining 801,900 BTC could be funded through emergency support functions, selling a portion of its $455 billion gold reserves in exchange for bitcoin, or both—none of which would require printing money or taxpayer funds, noted VanEck.

Sigel and Frankovitz stated that the state, institutional, and corporate adoption of bitcoin in the U.S. will also boost CAGR projections for bitcoin and ether exchange-traded fund issuers.

Sigel wrote in an X post on Dec. 21 that the member nation-states of the BRICS alliance (Brazil, Russia, India, China, and South Africa) could also influence the price of bitcoin, leading to its increased use as a currency.

“For those member states looking to avoid the exponentially growing dollar sanctions, bitcoin is likely to be widely adopted as a settlement currency for global trade,” they noted.