Former Coinbase CTO Places $2 Million Bet That Bitcoin Will Hit $1 Million In 90 Days
Balaji Srinivasan, former CTO of Coinbase, made a $2 million bet that Bitcoin would hit the $1 million mark in 90 days. This bet was a response to financial expert James Medlock, who proposed a $1 million bet that the US would not slip into hyperinflation despite the recent collapse of banks in the country.
Bitcoin Will Hit $1 Million in 90 Days, Says Balaji
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 went 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 collapse but were allowed by regulators to hide their literal insolvency until it became a major problem. Citing the struggles of former FTX chief executive Sam Bankman-Fried, he added that banks had implemented a similar system of using customer deposits to invest in questionable securities.
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”They all used the deposits to buy the ultimate shit: long-term US Treasuries. And they were all rekt at the same time, in the same way, because they bought the same asset from the same supplier that devalued it at the same time: the Fed,” Balaji said.
But that is not all. Balaji claims that the current banking crisis will lead to what he calls “hyperbitcoinization”, a phenomenon where the world redefines Bitcoin as digital gold, similar to the model used before the 20th century with physical gold. He added that individuals, companies and large funds such as sovereign countries will buy Bitcoin to hedge against hyperinflation in the coming weeks.
Painting a bleak picture, Balaji believes that hyperinflation will quickly occur once dollar holders realize that the Fed has lied about how much money is in the banks. Citing a chart of the long-term USD/BTC depreciation, the analyst believes that a significant drop will occur in the coming weeks.
Balaji concludes by stating that he will transfer $2 million to USDC for the bet. This will be divided into $1 million bets with Medlock and $1 million with someone else. “Bet terms: Ideally, someone can set up a smart contract where BTC is worth over $1M in 90 days, then I win. If it’s worth less than $1 million in 90 days, the counterparty gets $1 million in dollars,” he proposed.
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Arthur Hayes, 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 on China’s decision to lower the Reserve Repurchase Rate (RRR).
Crypto community has mixed reactions
Unsurprisingly, Balaji’s gamble drew mixed reactions from the crypto community. While some believe his convictions may be right, most are willing to take his bet. Bitcoin price is currently around $27,000 at the time of writing.
Featured image from Unsplash, charts from Tradingview and Twitter