US Bitcoin Reserve Could Slash National Debt by 35% by 2049 According to VanEck

December 14, 2024February 6, 2025 EquityExplained

In recent years, the United States has seen its national debt soar to unprecedented heights. With a national debt of over $37 trillion at the start of 2025, it’s no wonder that policymakers are searching for innovative solutions to reduce this burden on the economy. One such proposal is to create a reserve of 1 million Bitcoin, as proposed by Senator Cynthia Lummis in her bill. According to asset management firm VanEck, if the United States were to implement such a plan, it could potentially reduce its national debt by 35% in just 24 years.

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The Estimate: A 25% CAGR for Bitcoin

VanEck’s estimate assumes that Bitcoin will increase at a compounded annual growth rate (CAGR) of 25% from $200,000 to $42.3 million by 2049. While this may seem like an ambitious target, the firm is not alone in its optimism. In fact, many experts believe that Bitcoin has the potential to become a widely accepted form of currency, with some even predicting that it could replace traditional fiat currencies altogether.

The Impact on National Debt

If VanEck’s estimate is correct, and Bitcoin does indeed reach $42.3 million by 2049, it would represent an estimated 18% of the world’s financial assets. To put this into perspective, Bitcoin currently represents around 0.22% of the global market, which stands at over $900 trillion.

According to VanEck’s estimates, if the United States were to create a reserve of 1 million Bitcoin, it would offset approximately $42 trillion of liabilities by 2049. This would represent a significant reduction in national debt, and one that could have far-reaching implications for the US economy.

The Lummis Bill: A Proposal for a Bitcoin Reserve

Senator Cynthia Lummis’ bill proposes the creation of a reserve of 1 million Bitcoin, which would be used to offset national debt. The bill suggests that the remaining 801,900 Bitcoin could be financed through Emergency Support Functions, or by selling a portion of the US gold reserves.

One of the key benefits of this proposal is that it does not require money printing or taxpayer funds. Instead, it relies on the growth of the Bitcoin market to generate revenue. This approach has already been endorsed by President-elect Donald Trump’s incoming administration, which has floated the idea of a Bitcoin reserve.

The Potential for Adoption

While the Lummis bill is still pending review in the Senate and House, there are several factors that could impact its success. One key factor is the adoption of Bitcoin at the US state, institutional, and corporate level. As more institutions and individuals begin to use Bitcoin as a form of currency, its value is likely to increase.

In addition, the growth of the global economy, particularly in nations such as China and India, could also contribute to increased demand for Bitcoin. According to Matthew Sigel, head of digital asset research at VanEck, "It’s very possible that Bitcoin will be widely used as a settlement currency for global trade by countries who want to avoid the parabolic increase in USD sanctions."

The BRICS Alliance and Global Trade

The BRICS (Brazil, Russia, India, China, and South Africa) alliance is another key factor that could impact the adoption of Bitcoin. As these nations continue to grow their economies, they are likely to require more efficient forms of currency for global trade.

Sigel notes that "the use of Bitcoin as a settlement currency could reduce the need for USD sanctions, which have been increasingly imposed by Western countries." This could lead to increased adoption of Bitcoin among BRICS member states, and ultimately contribute to its growth as a widely accepted form of currency.

Conclusion

The creation of a reserve of 1 million Bitcoin is just one potential solution to reducing national debt. While the Lummis bill still requires review in the Senate and House, it has already sparked significant interest among policymakers and investors alike.

As the global economy continues to evolve, it’s likely that we will see increased adoption of digital currencies such as Bitcoin. With a 25% CAGR estimate for Bitcoin by VanEck, it’s clear that this is an asset with tremendous growth potential.

Whether or not the Lummis bill becomes law remains to be seen. However, one thing is certain: the potential benefits of a Bitcoin reserve are undeniable, and policymakers would do well to take note.

Recommendations

Invest in Bitcoin: If you’re an investor looking for high-growth opportunities, consider investing in Bitcoin.
Follow Regulatory Updates: Keep up-to-date with regulatory changes that may impact the adoption of digital currencies such as Bitcoin.
Educate Yourself: Learn more about the potential benefits and risks associated with a Bitcoin reserve.