Bitcoin could reach a price of $1.3 million while gold may top $31,000 per ounce, if the assets become the sole reserve asset across the globe, respectively, according to a new report.
As the U.S. and some other western countries sanctioned Russia by freezing its central bank’s reserves, which include the euro, US dollars DXY, +0.26%, gold and China’s yuan among others, it should “reduce demand for hard currencies as reserve assets, while increasing demand for currencies that can perform the original functions of these former reserve currencies,” analysts at investment manager Van Eck Associates Corp. wrote in notes this week.
Gold GC00, -1.31% and bitcoin BTCUSD, +0.94% are the likely choices, while other assets such as real estate could be alternatives too, the analysts wrote. M0 and M2 are both classifications of monetary supply, where M0 includes the narrowest forms of the money supply, such as all paper and coin currency in circulation, plus reserves held by the central bank. M2 is a broader version.
Bitcoin appears to have a much higher upside than gold, though the latter is “the more straightforward initial response by central banks in particular,” the VanEck report noted.
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