Bitcoin at $42.3 Million per Coin in 2049 — The Revelation of Bitcoin Debt Monetization

Were you shocked by the headline? I felt the same way at first, thinking it was just wishful thinking. Don’t worry, I’m not clickbaiting you. I’ll explain in detail the origin of the $42.3 million figure later.

However, the recent Bitcoin price movements have been completely manipulated by Trump.

The day before yesterday (February 2, 2025), Trump raised taxes, causing Bitcoin’s price to drop below $92,000. Yesterday (February 3), Trump issued another executive order, sending Bitcoin’s price back above $100,000.

In yesterday’s executive order, Trump instructed Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick to establish the U.S.’s first Sovereign Wealth Fund (SWF) within the next 12 months. Trump stated that the fund might be used to acquire the social media platform TikTok and plans to fund it through tariffs and other revenue sources.

Senator Cynthia Lummis from Wyoming expressed concerns, hinting that this executive order might mean the U.S. government will buy Bitcoin. This is also why Bitcoin’s price surged above $100,000 in such a short time. Why?

Because Senator Lummis is no ordinary figure — she’s the senator who proposed the Bitcoin Reserve Act. In other words, if the Bitcoin Reserve Act faces obstacles, the newly established U.S. Sovereign Wealth Fund could be an alternative solution.

Your question might be: Is the “Bitcoin Reserve” really that great? Why must it be achieved at all costs?

The Bitcoin Reserve Act aims to reduce U.S. national debt by establishing a national Bitcoin reserve and leveraging Bitcoin’s potential for appreciation. Optimistically, it’s estimated that by 2049, this could help reduce U.S. national debt by 35%. Sounds appealing, doesn’t it?

The operation of the act includes the following key mechanisms:

1.1 Reserve Accumulation Mechanism

• Seizure of Bitcoin Transfers: The government will seize approximately 198,100 Bitcoins (worth about $18.8 billion) currently held by it and incorporate them into the national reserve.
• Annual Purchases: The plan is to buy an additional 200,000 Bitcoins annually for five years, bringing the total reserve to 1 million Bitcoins, representing about 4.76% of the total Bitcoin supply.
• Revaluation of Gold Reserves: By revaluing existing gold reserves, the government will raise about $64 billion to purchase more Bitcoins.

1.2 Expected Appreciation

According to a model from VanEck Asset Management, Bitcoin is expected to grow at a 25% compound annual growth rate (CAGR), increasing from $200,000 in 2025 to $42.3 million by 2049. If this prediction holds true, the value of the 1 million Bitcoins held in reserve will reach $42.3 trillion. Meanwhile, the U.S. national debt is expected to grow at a 5% annual rate, from $37 trillion to $119.3 trillion. As a result, Bitcoin’s appreciation could offset about 35% of the national debt.

1.3 Possible Outcomes

• Debt Reduction: The government could sell part of its Bitcoin holdings to repay national debt, effectively lowering the debt burden.
• Diversified Fiscal Revenue: Bitcoin, as a novel asset, offers the government a new revenue stream beyond taxes and traditional investments.
• Financial Innovation Leadership: By pioneering a Bitcoin reserve, the U.S. could lead in global financial innovation, strengthening its influence in the digital asset space.

In summary, the Bitcoin Reserve Act seeks to strategically accumulate and manage Bitcoin reserves to capitalize on their potential high appreciation, providing a new path for debt management and fiscal revenue in the U.S.

However, to achieve the 35% Bitcoin debt monetization goal, the key factor is that Bitcoin’s price needs to reach $200,000 in 2025 and $42.3 million by 2049. Clearly, this requires some imagination — not just from the speaker, but also from the listener, or else it may sound like two dreamers talking nonsense. So, does the current authority-backed Bitcoin price prediction support this fantasy?

Bitcoin price predictions have long been a hot topic in the cryptocurrency market, especially after recent policy changes under the Trump administration. Below are some major authority figures’ forecasts for Bitcoin’s future price and their reasoning:

2.1 Predictions from Leading Institutions

• Bernstein Analyst, $200,000: Analysts have raised their target price for Bitcoin to $200,000, citing the upcoming launch of a Bitcoin ETF in the U.S. They expect the ETF to account for about 7% of the circulating Bitcoin supply by the end of 2025. They note that strong capital inflows and institutional participation will be key drivers for the price increase.
• CoinShares, $250,000: James Butterfill, Director of Research at CoinShares, stated that Bitcoin’s price could range between $80,000 and $150,000 in 2025. However, if Trump fails to deliver on his promises of supporting cryptocurrencies, the market may see a correction. Long-term, Butterfill believes Bitcoin has the potential to reach $250,000.
• Matrixport, $160,000: Matrixport forecasts that Bitcoin will reach $160,000 in 2025, emphasizing that sustained demand for the Bitcoin ETF, favorable macroeconomic trends, and global liquidity expansion are important factors supporting this target.

2.2 Predictions from Notable Individuals

• Chamath Palihapitiya, $1,000,000: Famous investor Chamath Palihapitiya predicts Bitcoin will reach $500,000 in 2025 and exceed $1,000,000 by 2040. He believes that as more institutions and nations adopt Bitcoin, the asset will see tremendous growth.
• Peter Brandt, $200,000: Veteran trader Peter Brandt recently raised his Bitcoin price forecast to between $120,000 and $200,000. He believes that Bitcoin has recently broken through key technical resistance levels, suggesting that the market may enter a new bull cycle.
• Willy Woo, $102,000: Crypto analyst Willy Woo holds a more conservative view, expecting Bitcoin to stabilize around $88,000 in 2025, with potential upside to $102,000. Woo stresses the importance of supply and demand dynamics on price, particularly the significant impact of institutional investors’ buying activity, which limits the available Bitcoin in the market.

Notice that the most optimistic predictions only reach $1,000,000, with no forecast suggesting Bitcoin will hit over $10 million. So, is VanEck’s prediction that Bitcoin could grow at a 25% annual growth rate, reaching $42.3 million by 2049, completely unfounded?

Not at all — VanEck’s reasoning is actually quite solid.

Bitcoin’s historical compound annual growth rate (CAGR) provides a strong case for its long-term growth potential. According to data from CaseBitcoin, Bitcoin’s performance in terms of CAGR over different periods is as follows:

3.1 Bitcoin’s Historical CAGR Performance

• 10-year period: 196.7% CAGR (2014–2024), far exceeding traditional assets.
• 12-year period: 104% CAGR (2011–2023), still maintaining triple-digit growth.
• 5-year period: 60% CAGR (2019–2024), showing strong growth momentum in the short to medium term.

3.2 Phased Growth Characteristics

• Early Explosive Phase (2011–2017): Bitcoin achieved an average annual growth rate of over 200%, from $1 to $20,000. This phase was driven mainly by tech enthusiasts, with a smaller market size leading to high volatility.
• Institutionalization Phase (2018–2024): The CAGR slowed to between 60% and 85%, but market capitalization grew from $130 billion to $1.8 trillion. ETF approval, corporate allocations (e.g., MicroStrategy holding 190,000 Bitcoins), and sovereign funds getting involved became new drivers.
• Potential National Reserve Phase (2025–): Under Trump’s administration, the policy shift could lead to annual Bitcoin purchases of 200,000 coins (about 1% of the total supply). If this continues for five years, a structural supply-demand gap could emerge.

3.3 Feasibility of 25% Growth

• Historical Benchmark: Even taking a quarter of the 12-year period’s 104% CAGR (26%), it’s still higher than VanEck’s 25% forecast.
• Volatility Smoothing: As market capitalization expands (currently at $1.8 trillion), Bitcoin’s 30-day volatility has dropped from 100% in earlier years to 25%, approaching gold-like levels.
• Incremental Funding Demand: To reach the $42.3 million target by 2049, about $2.1 trillion in new capital would need to flow in annually. When compared to global pension funds ($56 trillion) and the gold market ($12 trillion), this scale is achievable.

Although the historical CAGR far exceeds 25%, the natural slowdown in growth after market capitalization expansion aligns with the growth patterns of assets. If Bitcoin can maintain 1/10th of gold’s market growth rate (with gold’s CAGR from 2000 to 2020 at 9.2%), combined with the network effects of digital assets, a 25% compound annual growth rate is grounded in reality.

Now, do you think the possibility of Bitcoin reaching $42.3 million by 2049 is a bit more believable? Perhaps, you might even agree that having this dream isn’t such a bad idea — what if it actually happens?

So, what does this imply for China’s current debt resolution strategies?

China’s current debt resolution strategy mainly focuses on debt swaps and fiscal restructuring to ease local government pressures. The main paths for China’s debt resolution are as follows:

Debt Swaps and Scale Control

According to the Ministry of Finance’s plan, starting from 2024, China will replace hidden debts with 8 trillion yuan worth of special bonds annually, and additionally issue a new debt limit of 6 trillion yuan. Over the next five years, this will address 10 trillion yuan of local debt. By issuing government bonds with low interest rates and long maturities to replace high-cost urban investment bonds, local governments’ hidden debts will be reduced from 14.3 trillion yuan to 2.3 trillion yuan.

Strengthening Fiscal Discipline

The policy focuses on clearing illegal financing, managing debt limits, and implementing lifetime accountability systems, while controlling government debt levels at 67.5% (below the international warning line of 60%). For example, in 2023, of the total debt of 85 trillion yuan, hidden debts only accounted for 16.8%.

Economic Recovery Driver

By alleviating local governments’ debt repayment pressure (with annual debt resolution amounts reduced from 2.86 trillion yuan to 460 billion yuan), China is reallocating fiscal resources to invest in public welfare and infrastructure, aiming to activate domestic demand.

You may have noticed that China’s current debt resolution does not reduce the total amount of debt — it merely shifts or defers the debt. Of course, you might argue that China’s debt is domestic, and it’s not a big deal. However, imagine if China established its own Bitcoin reserve mechanism, using Bitcoin to exchange for dollars and then using dollars to buy yuan — wouldn’t that be a much more effective way to reduce local government debt?

Bitcoin is considered a “digital gold,” with its limited supply and immutability making it a reliable store of value during times of economic uncertainty and escalating geopolitical risks.

Unlike the U.S. dollar, Bitcoin’s decentralized nature makes it less susceptible to the policies of any single country. The U.S. needs Bitcoin, Russia needs Bitcoin, and similarly, China could actively use Bitcoin as a strong international currency. Of course, there are countless obstacles and restrictions, but no matter how far the road, once the first step is taken, the destination becomes achievable.

If you’re reading this and already feeling the urge to buy some Bitcoin, here’s a beginner’s guide to purchasing it. Remember, after buying, you should immediately transfer your Bitcoin to a cold wallet. There’s also a beginner’s guide on how to set up a Bitcoin cold wallet.

At first, when I heard that Bitcoin’s price might reach $42.3 million by 2049, I also thought it was a pipe dream and overly optimistic. However, VanEck suggests that if Bitcoin can maintain a 25% compound annual growth rate (CAGR), this target is achievable.

Moreover, Bitcoin’s history shows us that a 25% compound growth rate is not far-fetched.

Over the past 10 years (2014–2024), Bitcoin achieved a CAGR of around 196.7%; over 12 years (2011–2023), it reached about 104% CAGR; and in the past 5 years (2019–2024), it maintained a CAGR of about 60%.

While future growth rates may slow down, given Bitcoin’s past performance, a 25% annual growth rate is not unimaginable.

Airdrop Reference is an innovative blockchain education and promotion platform aimed at spreading basic blockchain knowledge and helping ordinary users understand and participate in the development of blockchain technology. The mission of this project is to lower the entry barriers to blockchain, promote high-quality blockchain projects, and allow more people to enjoy the benefits of the Web3.0 era.

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