Based on the extreme case that either becomes the reserve global currency, the investment firm made a very high valuation.
VanEck believes that if it becomes a global reserve asset, it can be worth as much as $4.8 million per coin.
That is a big possibility, but VanEck thinks the Chinese currency is a better bet.
A Thursday insights piece written by VanEck’s head of active EM debt Eric Fine and chief economist Natalia Gurushina attempted to compare the price implications for gold and Bitcoins if either were to be adopted as the backing for global currency regimes.
VanEck’s analysis found that the implied price for BTC ranged from $1.3 million to $4.8 million. The lower prediction was based on BTC as a monetary base (M0), which investment database Investopedia says includes all circulating supply of a currency and bank deposits but is not a common marker for economists to look at.
Investopedia considers the M2 assessment to be a measure of the money supply that includes all bank deposits with a currency and the ability to be converted into cash.
The M0 price prediction of $31,000 was the starting point for the assessment of gold’s per-ounce price because a lot of central banks have little or no reserve gold.
Russia is considering using different currency to transact for oil with their friendly partners China and Turkey because of the recent unrest.
The United States dollar’s dominance is likely to take a hit if the trend applies to more nations’ central banks. The Chinese yuan should be considered the top prediction for a new reserve currency, but nations will likely rearrange their holdings no matter what.
“Central banks are likely to change their reserve mix to the detriment of dollars (and euros and yen) and the enhancement of something else, to one extent or another […] As a result, some central banks — and private actors — will be diversifying their reserves.”
The analysts urged readers to bear in mind that the predictions are only the beginning of the process of figuring out how to value gold and BTC in the extreme. It was noted that there are other alternatives that could serve the function of gold or BTC.
VanEck has a stake in the industry with a fund that has $30.1 million in assets. The firm recently filed with the SEC to launch a new exchange traded fund that focuses on gold mining companies.
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