VanEck believes bitcoin could rise to $3 million by 2050 if the cryptocurrency captures a significant share of global trade, including energy markets. The projection matters to the firm’s long-term investment case because it views bitcoin as protection against dollar debasement and sees growing interest from younger generations and sovereign states.

Matthew Sigel, VanEck’s head of digital asset research, said the firm evaluates investments over a 10-year macroeconomic horizon. In his view, the fundamental case for bitcoin as a hedge against dollar debasement remains intact.

Sigel said interest among younger generations and sovereign states points to further adoption of bitcoin, although he expects that process to remain volatile.

VanEck is more cautious about the cryptocurrency’s short-term outlook. Earlier this year, the firm dropped a previously considered bitcoin price target of $180,000.

Bitcoin miners and AI demand

Sigel said bitcoin miners benefit from access to grid-connected power and existing energy infrastructure. Surging demand from the artificial intelligence sector has made miners’ long-term power contracts significantly more valuable, he said.

Some mining companies have signed agreements lasting 10 to 20 years with investment-grade counterparties, according to Sigel. Such deals reduce their dependence on bitcoin’s price and allow them to repurpose capacity for AI-related demand.

If bitcoin rises significantly, miners could shift some capacity back to cryptocurrency mining. Sigel described that flexibility as “undervalued optionality” and said VanEck’s aggregate bitcoin exposure across its active strategies is at an all-time high.

Bitcoin and gold

VanEck views bitcoin and gold as assets that perform some similar portfolio functions but carry different levels of risk. Sigel said bitcoin is roughly three times more volatile than gold, prompting institutional investors to take smaller bitcoin positions to achieve comparable risk levels.

About 2% of VanEck’s assets under management is allocated to digital assets and bitcoin-related instruments, while about 13% is allocated to gold and gold-mining companies.

Sigel also highlighted differences in mobility. Gold must be physically transported across borders, while bitcoin can be transferred almost instantly.

The bitcoin-to-gold ratio fell to 16 to 17 over the summer, close to multiyear lows, after previously reaching about 40, Sigel said. In his view, bitcoin could theoretically double relative to gold, supporting a positive outlook for bitcoin over the next year.

Sigel said bitcoin’s short-term relationship with the DXY dollar index remains unstable. Over the long term, however, bitcoin and gold tend to trade against the dollar, he said.

Quantum-computing risk

Sigel identified quantum computing as a genuine long-term risk for bitcoin, while emphasizing that the issue affects virtually all modern software.

Bitcoin’s conservative approach to protocol changes provides an advantage, in his view. However, the absence of centralized leadership could make it harder to deploy a potential upgrade quickly.

Sigel said developers in the bitcoin ecosystem have begun working more actively on the quantum threat and that the issue will need to be addressed over the next few years. He said quantum computing is not currently a reason to sell bitcoin.

VanEck’s price targets

Sigel said he had not personally forecast that bitcoin would reach $1 million within the next five years. Instead, he cited VanEck’s medium-term target based on bitcoin reaching the equivalent of 50% of gold’s market capitalization, which he estimated would put bitcoin at roughly $500,000.

According to Sigel, bitcoin could reach that level during either the current market cycle or the next one.

Over a longer horizon, VanEck’s model indicates that bitcoin could rise to $3 million by 2050. Reaching that level would require the cryptocurrency to secure a significant role in global trade, including energy markets.

Source: Incrypted