Bitcoin

Reserve

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The United States could reduce its national debt by 35% in the next 24 years if it creates a reserve of 1 million Bitcoin, in line with a bill proposed by Senator Cynthia Lummis, asset management firm VanEck said.
VanEck’s estimate assumes Bitcoin (<a href="https://cointelegraph.com/bitcoin-price" rel="noopener noreferrer nofollow" target="null">BTC</a>) will increase at a compounded annual growth rate (CAGR) of 25% to $42.3 million by 2049, while <a href="https://cointelegraph.com/news/us-debt-bitcoin-adoption-hard-money" rel="noopener noreferrer nofollow" target="null">US national debt climbs</a> at a 5% CAGR from $37 trillion at the start of 2025 to $119.3 trillion over the same time.
“The reserve could represent an estimated 35% of the national debt by 2049, offsetting ~$42 trillion of liabilities,” VanEck’s head of digital asset research, Matthew Sigel and investment analyst Nathan Frankovitz said in a Dec. 20 <a href="https://www.vaneck.com/us/en/blogs/digital-assets/matthew-sigel-vaneck-mid-december-bitcoin-chaincheck/" rel="noopener noreferrer nofollow" target="null">report</a>.
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 Estimated US national debt rise with Bitcoin reserve growth from 2025 to 2049. Source: VanEck
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The duo’s “optimistic” scenario assumed Bitcoin’s 25% CAGR would start from a $200,000 price point in 2025. <a href="https://cointelegraph.com/explained/what-determines-the-bitcoin-price" rel="noopener noreferrer nofollow" target="null">Bitcoin</a> is currently trading at $95,360 and would need to more than double to reach VanEck’s noted starting point.
Bitcoin’s price rising to $42.3 million would mean it <a href="https://cointelegraph.com/explained/how-michael-saylor-uses-the-time-value-of-money-to-combat-fiat-devaluation" rel="noopener noreferrer nofollow" target="null">represents around 18%</a> of the world’s financial assets — up massively from around the 0.22% it represents in today’s $900 trillion market.
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 <img alt="Law, United States, Bills, Donald Trump" src="https://s3.cointelegraph.com/uploads/2024-12/0193f0f4-5959-709e-bc67-02a440a3643c" title="">
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 Estimates US national debt and Bitcoin reserve holdings and Bitcoin value at a presumed CAGR of 25%. Source: VanEck
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President-elect Donald Trump’s incoming administration has floated the idea of a Bitcoin reserve, which has <a href="https://cointelegraph.com/news/bitcoin-sets-new-all-time-high-above-105000" rel="noopener noreferrer nofollow" target="null">fueled a Bitcoin price rally</a> to over six figures, but the Lummis bill still hasn’t been <a href="https://www.congress.gov/bill/118th-congress/senate-bill/4912/all-info" rel="noopener noreferrer nofollow" target="null">reviewed</a> by the Senate or House.
Related: <a href="https://cointelegraph.com/news/bitcoin-reserve-act-end-crypto-4-year-cycle-supercycle" rel="noopener noreferrer nofollow" target="null">A Bitcoin Reserve Act may end crypto’s 4-year boom-bust cycle</a>
Strike founder and CEO Jack Mallers claimed earlier this month that Trump may <a href="https://cointelegraph.com/news/trump-bitcoin-us-reserve-asset-day-one-how-high-will-btc-price-go" rel="noopener noreferrer nofollow" target="null">issue an executive order</a> on his first day in office to designate Bitcoin as a reserve asset.
Under the Lummis bill, the US could repurpose the 198,100 Bitcoin it <a href="https://intel.arkm.com/explorer/entity/usg" rel="noopener noreferrer nofollow" target="null">holds</a> from asset seizures while the remaining 801,900 Bitcoin could be financed through Emergency Support Functions, selling a portion of its $455 billion gold reserves for Bitcoin, or a combination of both — all without money printing and taxpayer funds, VanEck noted.
Bitcoin’s adoption at the US state, <a href="https://cointelegraph.com/news/bitcoin-etfs-flip-gold-funds-aum-k33-research" rel="noopener noreferrer nofollow" target="null">institutional and corporate level</a> would also bolster the Bitcoin and Ether (<a href="https://cointelegraph.com/ethereum-price" rel="noopener noreferrer nofollow" target="null">ETH</a>) exchange-traded fund issuer’s CAGR estimates, Sigel and Frankovitz said.
Nation-state <a href="https://cointelegraph.com/news/russia-brics-bitcoin-ai-play-kickstart-game-theory" rel="noopener noreferrer nofollow" target="null">members of the BRICS</a> (Brazil, Russia, India, China, and South Africa) alliance could also impact Bitcoin’s price and make it increasingly used as a currency, Sigel <a href="https://x.com/matthew_sigel/status/1870492846027088321" rel="noopener noreferrer nofollow" target="null">explained</a> in a Dec. 21 X post.
“It’s very possible Bitcoin will be widely used as a settlement currency for global trade by countries who wanted to avoid the parabolic increase in USD sanctions that have been imposed,” he said.
Magazine: <a href="https://cointelegraph.com/magazine/microstrategy-bitcoin-pig-butchering-lazarus-asia-express-2024-rewind/" rel="noopener noreferrer nofollow" target="null">Rise of MicroStrategy clones, Asia dominates crypto adoption</a>

US Bitcoin reserve could slash national debt 35% by 2049: VanEck

Cointelegraph

Other articles published on Dec 23, 2024

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