Vaneck has announced a courageous prediction that Bitcoin will play a crucial role in the management of the increasing public debt of the United States. The study, based on the Senator Cynthia Lummis proposed Bitcoin Act, shows that a strategic Bitcoin reserve can partially compensate for the country’s debts by 2049. But how feasible is this concept?
The possible effects of strategic bitcoin reserves
The study examines a scenario in which the US government receives up to 1 million BTC for a period of five years. If this strategy comes into play, Vaneck believes that such a reserve can help by 2049 to compensate for public debt of almost 21 trillion dollars. Based on forecasts of future debt growth, this corresponds to around 18% of the expected total debt at this time.
However, this positive forecast depends heavily on bitcoins price trajectory. Vaneck’s model forecasts that BTC will grow with an annual rate of 25% (CAGR). Starting with an estimated acquisition price of $ 100,000 per unit in 2025, the crypto would have to record a continued price increase in the next two decades.
Source: VanEck
Debt growth compared to Bitcoin value estimation
In the study, the expected annual annual interest rate of the US debt in the United States is expected. All efforts to compensate for the predicted 100 trillion dollars by 2049 with $ 100 trillion dollars require assets with great value increase potential.
Although Bitcoin is very volatile, it offers both a challenge and a chance. A 25% CAGR is an ambitious goal if one takes into account the volatility in the past, regulatory uncertainties and the acceptance patterns of the industry. If the slowdown of the expansion of the crypto may not meet expectations, which reduces the value in combating public debt.
Bitcoin as a governance
Vaneck’s view is in line with a broader discussion about the role of the leading digital currency in the economies of the digital currency. Countries like El Salvador have already taken over the top coins to their financial plans, albeit far less. If the United States pursued a similar strategy, this would be an unprecedented shift in monetary policy.
The practicability of building such a massive Bitcoin reserve raises concerns. Would the government gradually buy the crypto assets or in large quantities? How would it protect and govern such a good? This uncertainties make Vaneck’s vision difficult.
A high risk game or a financial breakthrough?
Despite these obstacles, Vaneck’s research offers a fascinating option. The potential of BTC as a long -term asset reserve is still an issue of debates among economists and political decision -makers. It can be possible to use the digital asset in order to alleviate public debt if your value continues to increase.
At the moment, the feasibility of this strategy remains uncertain. The US government has not yet specified any specific plans for the acquisition of the Alpha crypto. With increasing public debt and growth of Bitcoin, the discussions about this unconventional solution are far from over.
Selected picture of Gemini Imageen, Diagram from Tradingview