Bitcoin Reserve Could Slash US Debt by 35% in 24 Years as Price Hits $42M

A Bitcoin reserve proposed by Senator Cynthia Lummis could slash US national debt by 35% by 2049, predicts VanEck. The firm forecasts Bitcoin could grow 25% annually, reaching $42.3 million and representing 18% of global financial assets by then.

Lummis Proposal: A Bold Plan to Cut National Debt

Asset management firm VanEck states that Senator Cynthia Lummis's measure, which would require the US to set aside 1 million Bitcoin, may lead to a 35% reduction in the national debt within the next 24 years.

The US national debt is projected to climb from $37 trillion at the start of 2025 to $119.3 trillion by 2049, according to VanEck's assessment, while Bitcoin is projected to increase at a CAGR of 25%, reaching $42.3 million by the same year.

“The reserve could represent an estimated 35% of the national debt by 2049, offsetting ~$42 trillion of liabilities,” stated a report by Nathan Frankovitz, an investment analyst, and Matthew Sigel, head of digital asset research at VanEck, on December 20.

In their "optimistic" scenario, the two made the assumption that Bitcoin's 25% CAGR would begin at a price of $200,000 in 2025. At its current price of $95,360, Bitcoin would have to more than quadruple to reach the starting point mentioned by VanEck.

Bitcoin's Potential Role in Global Assets

If Bitcoin's price were to reach $42.3 million, it would represent about 18% of the world's financial assets, a significant increase from its current representation of around 0.22% in the $900 trillion market.

The notion of a Bitcoin reserve has been mooted by the incoming Trump administration, leading to a surge in Bitcoin prices to above six figures. However, neither the Senate nor the House have yet examined Senator Lummis' measure.

The four-year boom-and-bust cycle of the cryptocurrency market could come to an end if the Bitcoin Reserve Act is passed, Cointelegraph points out.

Strategic Moves to Fund a Bitcoin Reserve

According to Strike CEO and founder Jack Mallers, who made the allegation earlier this month, Trump may classify Bitcoin as a reserve asset on his first day in office by an executive order.

According to VanEck, the US could use the 198,100 Bitcoin it has from asset seizures, or 801,900 Bitcoin could be funded through Emergency Support Functions, or a mix of the two. This would all happen without the need to print money or use taxpayer funds, according to the Lummis bill.

Global Adoption and Bitcoin’s Increasing Relevance

Bitcoin and Ether exchange-traded fund issuers' CAGR predictions would be strengthened, according to Sigel and Frankovitz, if Bitcoin was to be adopted by US states, institutions, and corporations.

Sigel explained in a post on Dec. 21 X that the BRICS (Brazil, Russia, India, China, and South Africa) coalition might have an effect on Bitcoin's price and its usage as a currency.

“It’s very possible Bitcoin will be widely used as a settlement currency for global trade by countries who wanted to avoid the parabolic increase in USD sanctions that have been imposed,” they pointed out.