Can Bitcoin Erase $42 Trillion? U.S. Debt Solution by 2049
@Max, please take charge of this article.
Tentative title: "The US Can Reduce National Debt by 35% in 24 Years with a Bitcoin Savings of 1 Million"
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Please wait for a moment.
Let's begin the analysis. Recently, a proposal to use Bitcoin as a means to reduce the national debt of the United States has garnered attention. According to asset management company VanEck, a bill proposed by Senator Cynthia Lummis suggests that setting aside 1 million Bitcoins as a reserve could potentially reduce the national debt by 35% over the next 24 years.
VanEck estimates that if Bitcoin's compound annual growth rate (CAGR) increases by 25%, its value could reach $42.3 million by 2049. In contrast, the U.S. national debt is expected to grow at an annual rate of 5%, increasing from $37 trillion in 2025 to $119.3 trillion by 2049. This implies that a Bitcoin reserve could offset about $42 trillion in debt by 2049, representing 35% of the national debt, according to VanEck's analysis.
"This reserve could offset approximately $42 trillion of debt by 2049, amounting to 35% of the national debt," stated Matthew Sigel, Head of Digital Asset Research at VanEck, and investment analyst Nathan Franckowicz in a report released on December 20.
In the 'optimistic' scenario proposed by the researchers, a 25% CAGR for Bitcoin would start from a price point of $200,000 in 2025. Currently, Bitcoin is trading at $95,360, and would need to more than double to reach this price point.
If Bitcoin reaches $42.3 million, it would represent about 18% of the world's financial assets, a significant increase from its current share of approximately 0.22% in the $900 trillion market.
The idea of a Bitcoin reserve has been inspired by the prospect of Donald Trump's next administration, triggering a substantial price rally for Bitcoin. However, Senator Lummis's bill has yet to be reviewed by either the Senate or the House.
Related article: Could the Bitcoin Reserve Bill End the Crypto’s Four-Year Boom-Bust Cycle?
Jack Mallers, founder and CEO of Strike, claimed earlier this month that Trump could issue an executive order to designate Bitcoin as a reserve asset on his first day in office.
According to Lummis's bill, the U.S. could use 198,100 Bitcoins seized through asset forfeiture, and the remaining 801,900 Bitcoins could be funded through emergency support functions or by selling a portion of the $455 billion in gold reserves to acquire Bitcoin. This could be done without resorting to printing money or raising taxes.
If Bitcoin adoption increases at the national, institutional, and corporate levels in the U.S., it would further strengthen the CAGR forecasts of Bitcoin and Ether exchange-traded funds (ETFs) issuers.
Members of the BRICS alliance (Brazil, Russia, India, China, South Africa) could also impact Bitcoin’s price, with the possibility of Bitcoin being increasingly used as a currency. On December 21, Sigel explained in a post on X, "It is highly likely that countries aiming to avoid exponentially increasing U.S. dollar sanctions will widely use Bitcoin as a settlement currency for global trade."
All right.
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