How a national Bitcoin reserve will help the U.S. with government debt: VanEck analysts’ prediction
During the election campaign, newly elected US President Donald Trump promised to create a national Bitcoin reserve for America. It involves the purchase of one million coins over five years, which must be stored without moving for at least twenty years. The only exception could be the sale of BTC to pay off the US government debt. But will cryptocurrency really help the world leader of financial markets with this?
Earlier, Trump directly stated the possibility of using coins to pay the US state debt. The scheme was to buy bitcoins for the long term, store them for many years until the price increases significantly and then sell them.
For example, here is a video from early August 2024, in which Donald Trump spoke about the prospect of paying off the then $35 trillion national debt with BTC.
It is too early to discuss the topic of creating a national Bitcoin reserve, because the newly elected politician has not yet taken office – this will happen on 20 January 2025. However, there is still progress in this regard.
The day before, we analysed the situation with fresh bills in three states: Texas, Pennsylvania and Ohio. There, members of the House of Representatives are seriously worried about the gradual depreciation of the dollar and offer to hedge risks with the most popular cryptocurrency in the world.
According to experts, subsequently this base can become the basis for the accumulation of coins on the scale of the whole state. Well, the coins themselves are quite capable of improving what is happening with the U.S. government debt.
Why the U.S. needs bitcoins
According to analysts of the largest investment fund VanEck, Bitcoin reserve will be able to reduce the U.S. national debt by 35 per cent by 2049. Such a thing will be relevant if the authorities acquire one million BTC and the cryptocurrency rises to $42.3 million per coin by that date, which is in line with the company’s expectations.
Bitcoin fell to the $93,000 level today. So why should the cryptocurrency suddenly rise to millions after decades?
According to the version of analysts, the key to the unprecedented growth of BTC will be the demand for coins from large companies and states. As previously noted representatives of the Bitwise Foundation, they expect Bitcoin at $ 200 thousand next year, but in the case of the formation of national cryptocurrency reserves in the United States and other countries will raise expectations to 500 thousand and more.
MicroStrategy founder Michael Saylor also shared a similar summer. He expects BTC at $3 million by 2045 - and this is the worst of the three scenarios presented.
VanEck analysts’ estimate assumes that Bitcoin will increase in value at an annual growth rate of 25 per cent, while the corresponding government debt will grow at an annual rate of 5 per cent. Where will it end up?
According to experts, Bitcoin will rise in value to $42.3 million by 2049, while government debt will jump from the current $36.2 trillion to $119.3 trillion in the same time frame.
Here’s a commentary from VanEck’s head of digital asset research Matthew Siegel and investment analyst Nathan Frankowitz.
A bitcoin reserve could account for about 35 per cent of the national debt by 2049, thus offsetting about $42 trillion in liabilities.
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It is important to note that the optimistic scenario of analysts starts with Bitcoin at $ 200 thousand per coin in 2025. Accordingly, the cryptocurrency needs to increase in value more than twice more to reach the starting point.
The growth of BTC to the specified mark of $42.3 million means that the cryptocurrency will account for about 18 percent of the capitalisation of all financial assets, according to Cointelegraph.
This is a significant jump from the current level of 0.22 percent of the 900 trillion market capitalisation.
As Senator Cynthia Lummis’ coin-buying bill suggests, the US can use 198,100 BTC that were previously seized by authorities and are now held in government wallets. The remaining 801,900 BTC will be acquired through the so-called Emergency Support Functions or by selling a portion of the $455 billion gold reserves, or a combination of the two.
In any case, the authorities will not have to print dollars or use taxpayers’ funds to buy coins, VanEck analysts said.
Meanwhile, global giants continue to buy cryptocurrency. A Japanese investment firm reported buying 619.7 BTC for $60 million.
This is the largest purchase of the crypto giant, bringing its total savings to 1,761.98 BTC. The average purchase price of each coin is $75.6 thousand.
So far, the US is not working on the creation of a national Bitcoin reserve, because it takes a lot of time. However, analysts of large investment funds are already engaged in forming a narrative, according to which BTC and other popular cryptocurrencies can bring huge returns in the long term. And with governments and large companies buying coins, this prediction will indeed become a reality.
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