Balaji Srinivasan, former CTO of Coinbase, has placed a $2 million bet that the bitcoin price will reach $1 million in 90 days. This bet was in response to financier James Medlock who proposed a $1 million bet that the United States would not enter hyperinflation despite the recent collapse of the country’s banks.
Balaji says bitcoin will reach $1 million in 90 days
In a Twitter thread on March 17, Balaji explained his views and why he was proposing the bet. He claims that the current banking situation is similar to the 2008 financial crisis, but this time, central bankers, banks and regulators lied to all dollar holders and depositors. According to the investor, the banking crisis overtook partial reserves as banks did not have enough funds on a market-to-market basis to cover withdrawals.
Balaji also claims that the banks saw collapse imminent but the regulators allowed him to hide their actual bankruptcy until it became a big problem. Pointing to the troubles of former FTX CEO Sam Bankman-Fried, he added that banks implemented a similar system of using customer deposits to invest in questionable bonds.
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They all used deposits to buy the ultimate shitcoin: long-term US Treasury bonds. And they all got demand at the same time, in the same way, because they bought the same asset from the same seller that devalued them at the same time: the Federal Reserve,” Balaji said.
but that is not all. Balaji claims that the current banking crisis will lead to what he calls “hyperbitcoinization,” a phenomenon in which the world rebrands Bitcoin as digital gold, similar to the model used before the 20th century as physical gold. He added that large individuals, companies and funds such as sovereign states will buy bitcoin to hedge against hyperinflation in the coming weeks.
Painting a bleak picture, Balaji believes that hyperinflation will set in quickly once dollar holders realize that the Fed has lied about how much money is in the banks. Citing a chart of the long-term decline of USD/BTC, the analyst believes that a significant decline will occur in the coming weeks.
Balaji concludes by saying that he will move $2 million into USDC for the bet. This will be divided into a million dollars with Medlock and a million dollars with someone else. “Betting conditions: Ideally, anyone can set up a smart contract where BTC is worth more than $1 million in 90 days, then I win. If it is worth less than $1 million in 90 days, the counterparty will get $1 million in USD.”
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Arthur Hayes, former CEO of BitMex, also agrees that BTC could reach $1 million. Hayes chirp “BTC = $1M,” with a screenshot of a Bloomberg article reporting China’s decision to lower its repurchase reserve rate (RRR).
The crypto community has mixed reactions
Unsurprisingly, Balaji’s bet drew mixed reactions from the cryptocurrency community. While some believe his convictions could be true, the majority are willing to bet his bet. Bitcoin is currently around $27,000 at the time of writing.
Featured image from Unsplash, charts from Tradingview and Twitter