VanEck released long-term capital market assumptions projecting Bitcoin (CRYPTO: BTC) could reach $2.9 million by 2050 in its base case, implying a 15% compound annual growth rate from current levels near $88,000.
Base Case Built On Settlement And Reserve Adoption
VanEck’s base case assumes Bitcoin will settle 5-10% of global international trade and 5% of domestic trade by 2050, while central banks allocate 2.5% of their balance sheets to Bitcoin as a reserve asset.
The projection represents a structural shift from speculative asset to institutional monetary instrument.
VanEck models Bitcoin’s penetration into two markets: global medium of exchange and central bank reserve assets.
The firm’s bear case projects $130,000 by 2050 (a 2% CAGR), while the bull case targets $53.4 million (a 29% CAGR) if Bitcoin captures 20% of international trade and 10% of domestic GDP.
Global M2 Explains 54% Of Bitcoin Price Variance
VanEck’s analysis shows that when central banks around the world print more money (measured by M2 money supply), Bitcoin’s price tends to rise.
This relationship explains over 54% of Bitcoin’s price movements since 2014.
The firm says Bitcoin responds primarily to expanding money supply and currency debasement, not to tech stock performance as many assume.
In simpler terms: more dollars chasing the same 21 million Bitcoin supply pushes prices higher.
Bitcoin used to move inversely with the U.S. Dollar—when the dollar weakened, Bitcoin rallied.
That relationship has loosened recently, suggesting Bitcoin now reacts more to government spending problems globally rather than just dollar strength.
Short-term price swings are driven by futures trading and leverage.
Futures market activity explains 73% of Bitcoin’s price variance since October 2020, meaning when traders add or reduce leveraged bets, Bitcoin moves sharply regardless of fundamental news.
Onchain Metrics Show Mid-Cycle Position
VanEck tracks Relative Unrealized Profit (RUP), which measures how much profit holders are sitting on.
The metric currently sits at 0.43, well below the 0.70 level that historically signals market tops. This suggests Bitcoin remains mid-cycle with room to run.
Futures funding rates at 4.9% also indicate balanced sentiment, compared to the 10%+ levels that typically precede reversals.
VanEck Recommends 1-3% Strategic Allocation
VanEck suggests a strategic allocation of 1-3% for diversified portfolios, with allocations up to 20% for high risk-tolerant investors based on historical Sharpe ratio optimization.
Historical backtesting shows a 3% Bitcoin allocation in a traditional 60/40 portfolio yielded the highest return per unit of risk.
Since inception, a 58.5% equity / 38.5% bond / 3% Bitcoin portfolio delivered 13.05% annualized returns with a 1.08 Sharpe ratio, compared to 9.68% returns and 0.88 Sharpe ratio for the standard 60/40.
The firm projects annualized volatility of 40-70% for long-term modeling, though recent realized volatility has compressed toward 27%.
VanEck maintains low to moderate correlation expectations with equities, bonds, and gold over full cycles.
The firm also argues that holding zero Bitcoin exposure creates risk as sovereign debt problems worsen. A small, disciplined allocation provides hedge value against currency debasement without requiring investors to bet the farm on crypto’s success.
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