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Market fears over US fiscal health may boost Bitcoin, gold demand, suggests Van Eck.
Jan van Eck, CEO of the global asset management firm and Bitcoin ETF issuer VanEck, believes investors will turn to Bitcoin and gold as stores of value in response to a potential fiscal crisis in the US in 2025.
“I’ve got this theory that the markets are starting to price in a big fiscal problem in the United States in 2025,” said van Eck today. “They look at the two presidential candidates who are the biggest spenders in US history, and they’re going like, I’m not sure this problem is going to be solved. Give me a little gold, give me a little bit more bitcoin.”
Van Eck pointed to several indicators that suggest markets are growing concerned about the US fiscal situation, including the recent spike in US credit default swaps, which have remained elevated since jumping in 2023 due to budget impact concerns. He also highlighted the surprising multi-year outperformance of emerging market local currency debt versus US government debt.
As investors seek to protect their wealth in the face of these challenges, van Eck believes bitcoin and gold will become increasingly attractive options. While he acknowledged the speculative nature of bitcoin investing, he sees the “digital gold” narrative building momentum since 2016-2017 and projects that bitcoin could eventually reach at least half the market cap of gold, though it may take another 5-10 years.
To navigate this landscape, van Eck encourages investors to consider a disciplined approach of dollar-cost averaging a small portfolio allocation to Bitcoin.
“I think emotionally it’s hard for people to do that,” he said. “So my hope is those allocators will be open-minded enough to consider gold or Bitcoin at the right time in the cycle and discipline to take advantage of those trends for the clients,” said van Eck today in a fireside discussion at Paris Blockchain Week.
Beyond Bitcoin as an asset, van Eck expressed excitement about the rapid growth and potential of stablecoins and other developments in the crypto space. With $12 trillion in stablecoin volume today, he believes 5x growth could have profound impacts on payment systems and banks, further underscoring the potential for disruption in the financial sector.
“It’s just what I try to underline is the growth potential. And just think about that alone, forgetting all the other exciting things that people are working on at this conference, that alone will have a huge political and financial impact,” van Eck noted.
Last week, the firm released a report forecasting that the Ethereum layer 2 (L2) market will reach a valuation of at least $1 trillion by 2030. However, due to the intense competition in the space, the firm remains “generally bearish” on the long-term value prospects for most L2 tokens.