The ongoing war in Ukraine has the importance of assets such as: Bitcoin and gold at the forefront of the global financial system, according to financial asset management firm VanEck.
The firm believes that in an extreme scenario where gold or Bitcoin becomes the reserve currency of the world, the value of the digital currency is expected to be between $1.3 million and $4.8 million.
The current geopolitical situation has led several economic analysts to suspect that rising political tensions will lead to a new monetary order in which Bitcoin and gold will play a more dominant role.
Bitcoin’s Real Valuation Is Over $1 Million
According to VanEck, the extreme implied price of more than $1 million was calculated by taking the total money supply M0 and M2 and dividing it by the global gold or bitcoin reserves in a scenario where they become the world’s go-to reserve. are assets.
According to the report, sanctions against Russia have reduced demand for hard currencies such as the US dollar. The two oft-compared assets are the biggest winners of this change in the existing financial order.
To explain the methodologies to arrive at its predictions, the company wrote:
The cash obligation is divided by the reserve asset. We used the current gold troy ounce reserves and we used the current exchange rate to convert the basic monetary obligation into US dollars. We use base money because the econometrics (worldwide) is good, and it’s understandable – it’s just currency in the pocket/circulation and instant deposits.
Under the framework, the company concluded that “the framework estimates the price of gold at approximately $31,000 an ounce and potential Bitcoin prices at approximately $1,300,000 per coin.”
Russia-Ukraine Effect on Bitcoin
While the world seems focused on the war in Ukraine, the importance of Bitcoin and the crypto industry has increased astronomically during difficult times.
The series of sanctions imposed on Russia has forced many countries to do so reconsider how to reduce their dependence on the western financial system to avoid a scenario where their The country’s economy may be the target of: the arming of the global financial system.
In the midst of all this, several crypto proponents have started to… talk about the demise of the dollar and the rise of Bitcoin as a global reserve currency.
Bitcoin’s value has risen about 35% since the war between Russia and Ukraine began and citizens of both countries have turned to digital assets as a hedge against the declining value of their national currencies.
This show seems to have renewed optimism among investors flocking in for the currency.
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