Bitcoin has been rocking as of late. While the currency is nowhere near where it was just five months ago – at that time in November of 2021, the world’s number one digital asset was trading for about $68,000 per unit – the currency has managed to get itself out of the doldrums and spike into the mid to high $40,000 ranges, a solid improvement over the $37,000 it was trading for in mid-March.
Bitcoin Could Be Heading to the Stars
Now, Van Eck – a company known for its history of submitting bitcoin-based exchange-traded fund (ETF) applications to the Securities and Exchange Commission (SEC) in the hopes of revolutionizing bitcoin trading – is claiming that if this momentum keeps up, BTC could potentially reach a price of $1.3 million.
In an interview, representatives of the company explained:
Our emerging markets bond investment team attempted to quantify the emergence of new gold or bitcoin-backed currency regimes… The bottom line is that the upside for gold and bitcoin is potentially dramatic. Specifically, the framework estimates gold prices of around $31,000 per ounce and potential bitcoin prices of around $1.3 million per coin. Adjusting for greater strains on financial and monetary systems generates even higher prices.
The prediction comes from Eric Fine, head of active emerging market debt for the company, and Natalia Gurushina, chief economist on emerging markets fixed income strategy. While both believe that bitcoin is headed for the moon, they issued the following warning to go with their prediction:
The prices generated in this extreme scenario in which either gold or bitcoin become the reserve asset obviously need to be adjusted downward. They are just a starting point. The upside on crypto seems much higher (around 33x) than that on gold (around 16x), although gold is the more straightforward initial response by central banks. However, individual actors may be faster to act.
El Salvador was the first country to arguably add the world’s number one digital currency to its financial roster. The nation then made the move of declaring the asset legal tender that could be utilized alongside USD, the fiat currency El Salvador has long been dependent on. It is believed that several other nations will follow suit and make similar moves surrounding bitcoin.
More Countries to Utilize the Asset?
Such a prediction came from Fidelity Investments not too long ago, which stated:
There is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers.
In addition, it has long been stated that countries such as Russia – which are currently being sanctioned by the United States and many of its allies – will try to use cryptocurrency to avoid such sanctions and keep their economies stable and financially accessible.