VanEck: US Could Slash National Debt By 35% With 1 Million Bitcoin Reserve

The US could potentially reduce its national debt by 35% within 24 years by establishing a reserve of 1 million Bitcoin, according to a report by asset management firm VanEck. The projection aligns with a proposal introduced by Senator Cynthia Lummis.

VanEck’s analysis assumes Bitcoin will grow at a compounded annual growth rate (CAGR) of 25%, reaching $42.3 million per BTC by 2049. During the same period, the U.S. national debt is expected to increase at a 5% CAGR, ballooning from $37 trillion in 2025 to $119.3 trillion.

By 2049, a Bitcoin reserve could offset approximately $42 trillion in national liabilities, according to the report authored by VanEck’s head of digital asset research, Matthew Sigel, and investment analyst Nathan Frankovitz.

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VanEck Project Assumes Bitcoin Price to Hit $200,000 in 2025

The projection assumes Bitcoin’s price will rise from $200,000 in 2025—a steep increase from its current trading price of $95,360.

If Bitcoin achieves the anticipated $42.3 million valuation, it would represent around 18% of the world’s financial assets, up significantly from its current 0.22% share of the $900 trillion market.

The idea of a U.S. Bitcoin reserve has gained momentum following discussions within Donald Trump’s incoming administration, fueling a Bitcoin price rally past $100,000.

Additionally, Strike CEO Jack Mallers speculated that Trump might issue an executive order designating Bitcoin as a reserve asset on his first day in office. However, Senator Lummis’ bill proposing such a reserve has yet to be reviewed by Congress.

The Lummis bill suggests repurposing the 198,100 Bitcoin seized from criminal activities and financing the remaining 801,900 BTC through measures like selling a portion of the country’s $455 billion gold reserves or using Emergency Support Functions.

VanEck emphasized that this strategy could avoid money printing or taxpayer funding.

“We have a model that assumes that by 2050 #Bitcoin becomes a reserve asset that is held by central banks at a 2% weight. In that model we arrive at a $3M price target for Bitcoin.”– VanEck pic.twitter.com/rrHa2wnrDa

— Bold Bitcoin (@BoldBitcoin) November 19, 2024

Adopting Bitcoin at federal, institutional, and corporate levels could further support its growth. VanEck noted that Bitcoin adoption by BRICS nations (Brazil, Russia, India, China, and South Africa) could also significantly impact its use as a global trade settlement currency.

According to Sigel, countries aiming to circumvent the increasing use of U.S. dollar sanctions might drive Bitcoin’s broader acceptance in international trade.

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US States Consider Adding Bitcoin To Reserves

Ohio has become the latest US state to consider adding Bitcoin to its treasury reserves, following the introduction of a new bill by House Republican leader Derek Merrin.

The initiative mirrors recent moves by Texas and Pennsylvania to establish Bitcoin reserves.

On 12 December 2024, Texas Representative Giovanni Capriglione introduced the Texas Strategic Bitcoin Reserve Act, which proposes that the state comptroller hold Bitcoin as a reserve asset for at least five years.

Pennsylvania took a similar step in November, with Representative Mike Cabell proposing a bill to allow its treasury to allocate up to 10% of its balance sheet in Bitcoin, citing the asset’s potential to hedge against economic uncertainty.

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