By Brayden Lindrea, CoinTelegraph
Compiled by: Deng Tong, Golden Finance
Asset management firm VanEck said that if the United States established a reserve of 1 million Bitcoins as proposed by Senator Cynthia Lummis, the United States could reduce its national debt by 35% over the next 24 years.
VanEck estimates that Bitcoin will grow at a compound annual growth rate (CAGR) of 25% to $42.3 million by 2049, while the U.S. national debt will grow at a CAGR of 5% from $3.7 trillion to $119.3 trillion at the beginning of 2025.
“By 2049, this reserve could account for 35% of the national debt, offsetting approximately $42 trillion in debt,” Matthew Sigel, head of digital asset research at VanEck, and investment analyst Nathan Frankovitz said in a Dec. 20 report.
The US national debt is expected to increase as Bitcoin reserves grow between 2025 and 2049. Source: VanEck
The “optimistic” forecast assumes that Bitcoin’s 25% compound annual growth rate will begin at a price point of $200,000 in 2025. Bitcoin, currently trading at $95,360, would need to more than double to reach the starting point noted by VanEck.
Bitcoin’s price rise to $42.3 million would mean it accounts for about 18% of global financial assets — far higher than its roughly 0.22% share of today’s $90 trillion market.
Estimated CAGR for US Treasury and Bitcoin reserve holdings and Bitcoin value is 25%. Source: VanEck
The idea of a Bitcoin reserve was floated by Donald Trump’s new administration, which has driven the price of Bitcoin to over six figures, but Senator Loomis’ bill still has not been reviewed by either the Senate or the House.
Strike founder and CEO Jack Mallers claimed earlier this month that Trump may issue an executive order designating Bitcoin as a reserve asset on his first day in office.
Under the Lummis Act, the U.S. could repurpose the 198,100 bitcoins it holds as a result of asset seizures, while the remaining 801,900 bitcoins could be financed through emergency backstopping functions, by selling a portion of its $455 billion gold reserves in exchange for bitcoin, or both — all without the need for money printing and taxpayer dollars, VanEck noted.
Sigel and Frankovitz said that Bitcoin’s adoption at the state, institutional and corporate levels in the United States will also boost the estimated compound annual growth rate of Bitcoin and Ethereum exchange-traded fund issuers.
Sigel explained in a Dec. 21 X post that nation-state members of the BRICS (Brazil, Russia, India, China and South Africa) alliance could also influence Bitcoin’s price and its increasing use as a currency.
“For countries looking to avoid parabolic growth in U.S. dollar sanctions, there is a strong possibility that Bitcoin will become widely used as a settlement currency for global trade,” they noted.