On March 18, former a16z partner and Coinbase CTO Balaji Srinivasan announced that he is moving $2 million into USDC for a bitcoin (BTC) bet. He thinks cryptocurrency will hit $1 million within 90 days.
Balaji Srinivasan went bullish, predicting BTC will reach $1 million by June 17. James Medlock, a pseudonymous Twitter user, set the gamble on March 27 by betting $1 million that the United States economy would not experience hyperinflation.
The former Coinbase executive accepted the wager. The bet’s proposed terms dictated that if bitcoin reached $1 million by June 17, Srinivasan would take home the $1 million in USDC and keep the 1 BTC. Similarly, if bitcoin fails to reach the $1 million mark by June 17, Medlock will take the dollar-pegged stablecoin USDC worth $1 million.
Srinivasan added another $1 million and called on one more person to prove the point.
Twitter users helped the two gamblers establish a smart contract, including the betting terms.
Srinivasan is convinced that a looming crisis is leading to the deflation of the US dollar, and hyperinflation will raise the price of BTC to $1 million. He coined ‘hyperbitcoinization’ — defining hyperinflation in BTC vs USD terms.
The James Medlock tweet was triggered by Balaji’s prediction that hyperinflation is happening. Balaji advised investors to get their coins off exchanges and to buy Bitcoin. The tech founder and angel investor noted recent Federal Reserve and government involvement in the Signature Bank and Silicon Valley bank saga. The Treasury Department announced it is setting aside $25 billion for the new Bank Term Funding Program (BTFP). He further highlighted Federal Reserve Bank of Minneapolis President Neel Kashkari’s announcement on the ‘infinite amount of cash at the Federal Reserve.’
Srinivasan debunked the involvement of Bitcoin as a hedge against hyperinflation, bank freezes, wealth seizures, and monetary debasement in December 2022. He predicted that Bitcoin, the largest cryptocurrency, may gain gold-like roles as a barrier against stable inflation with time.
Does the bet hold water?
Balaji’s tweets have caught on like wildfire, invoking opinions from different industry proponents and urging investors not to take Balaji’s word.
Alex Kruger, a market analyst, said taking Balaji’s word as the gospel truth based on the success of his previous predictions is an example of cognitive bias, “appeal to authority.” He said Balaji’s bet was insane unless there was a subterranean motive. Otherwise, the stake had a 0% success chance.
Ali Martinez, a market analyst, said that an equivalent of China’s entire GDP of $18,797,203,666,237 has to go into Bitcoin for it to reach $1 million in 90 days. The basic calculations do not account for variables such as depreciation in the US dollar value, order book depth, market liquidity, and other market dynamics.
While everyone is crazy about Balaji’s prediction, no one can overlook that bitcoin has been bullish and the possibility of it hitting $27,000 ahead of the FOMC meeting this week.
Although the Federal Reserve and big banks like JPMorgan intervened in the contagion of Silicon Valley Bank’s collapse and other fallen banks, analysts still expect even greater contagion in the TradFi. The industry is now focused on one question, is this the time that bitcoin rises to serve as the world’s reserve currency?