Balaji Srinivasan, a former CTO of Coinbase, has placed a $2 million bet that Bitcoin would hit the $1 million price mark in 90 days. This bet was in response to financial expert James Medlock who proposed a $1 million bet that the US would not enter hyperinflation despite the recent collapse of banks in the country.
Bitcoin Will Hit $1 Million In 90 Days, Balaji Says
In a Twitter thread on March 17, Balaji explained his views and why he was proposing the bet. He claims the current banking situation is similar to the 2008 financial crisis, but this time, central bankers, banks, and regulators have lied to all dollar holders and depositors. According to the investor, the banking crisis was beyond fractional reserves as banks do not have enough funds on a market-to-market basis to cover withdrawals.
Balaji also alleges that banks saw the crash coming but were allowed by regulators to hide their literal insolvency until it became a major problem. Citing the travails of former FTX chief executive Sam Bankman-Fried, he added that banks deployed a similar system of using customer deposits to invest in questionable bonds.
‘’They all used the deposits to buy the ultimate shitcoin: long-dated US Treasuries. And they all got rekt at the same time, in the same way, because they bought the same asset from the same vendor who devalued it at the same time: the Fed,’’ Balaji said.
But that’s not all. Balaji claims that the current banking crisis will lead to what he calls as “hyperbitcoinization,” a phenomenon where the world redenominates Bitcoin as digital gold, similar to the model used before the 20th century with physical gold. He added that individuals, firms, and large funds like sovereign countries will buy Bitcoin to hedge against hyperinflation in the coming weeks.
Painting a grim picture, Balaji believes that hyperinflation will occur fast once dollar holders realize that the Fed has lied about how much money is in the banks. Citing a chart of the long-term depreciation of USD/BTC, the analyst believes a significant drop-off will occur in the coming weeks.
Balaji concludes by stating he’ll be moving $2 million into USDC for the bet. This will be split into $1 million bet with Medlock and $1 million with another person. “Terms of the bet: ideally, someone can set up a smart contract where BTC is worth >$1M in 90 days, then I win. If it’s worth less than $1M in 90 days, then the counterparty gets the $1M in USD,” he proposed.
Arthur Hayes, the former CEO of BitMex, also agrees that BTC could reach $1 million. Hayes tweeted “BTC = $1 million,” with a screenshot of a Bloomberg article that reported China’s decision to reduce the reserve repo rate (RRR).
Crypto Community Has Mixed Reactions
Unsurprisingly, Balaji’s bet drew mixed reactions from the crypto community. While a few believe his convictions could be right, the majority are willing to take his bet. Bitcoin’s price is currently around $27,000 at the time of writing.
Featured image from Unsplash, charts from Tradingview and Twitter