According to the company, sanctions on Russia could prompt central banks to “consider changing the composition of their reserves.”
Investment firm VanEck’s analysts say Bitcoin’s value could rise to at least $1.3 million if cryptocurrencies become a de facto global reserve asset.
Eric Fine (Head of Active EM Debt) and Natalia Gurushina (Chief Economist, Emerging Market Debt Strategy) at VanEck explained that this projection is based on “an attempt to quantify what might happen if a new monetary system backed by gold and Bitcoin were to emerge.”
Sanctions on Russia could force central bank action
In a report published March 30, VanEck executives suggested that the sanctions imposed on Russia following its invasion of Ukraine may have dramatically shifted the global reserve system.
Last week Russia said it would accept Bitcoin for oil and gas payments.
“Central banks could change the composition of their reserves to bolster something other than the dollar (and the euro and yen) to some degree. U.S., eurozone, and Japanese sanctions on the Russian central bank have effectively ‘eroded’ Russia’s dollar, euro, and yen reserves. As a result, some central banks and private actors will diversify their reserves.“
Bitcoin as a global reserve asset could reach $4.8 million
VanEck’s team says they modeled a theoretical value for Bitcoin if it became a global reserve by dividing a hypothetical “global” valuation by Bitcoin’s total supply.
The analysts applied the same approach to gold, which shares the characteristic of limited supply, to estimate a potential price per ounce.
“The increases for gold and Bitcoin are dramatic. Under the framework, gold’s price is estimated at roughly $31,000 per ounce and Bitcoin’s potential price is estimated at about $1,300,000 per coin.“
The report’s authors note that adjusting the calculation from a narrower base money measure (M0) to the broader, more commonly used M2 would place greater strain on the financial and monetary system and could produce even higher prices.
Based on a global M2 valuation, VanEck says Bitcoin’s implied price could point to about $4,800,000 per coin, while gold could jump to roughly $105,000 per ounce.
The firm qualifies these projections with a large “if,” and suggests a more plausible outcome could be the Chinese renminbi emerging as a new candidate for a key reserve currency.
According to CoinGecko data, Bitcoin was trading near $45,000, down about 4.8% over the past 24 hours. Gold traded at $1,934 per ounce as of April 1 (Japan time 8:40 a.m.), down roughly 1%.