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Former Coinbase CTO, Balaji Srinivasanhas places a $2 million bet that Bitcoin will hit $1 million in the next 90 Days.
This public (twitter) bet was made in response to James Medlock (a financial expert) who proposed a $1 million bet that the US would not enter hyperinflation despite the recent collapse of banks in the country.
In response and through a long Twitter thread, Balaji claims the current banking situation is similar to the 2008 financial crisis.
However "this time, central bankers, and the bank regulators have lied to all dollar holders and depositors".
According to Balaji, 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. The cited the travails of former FTX chief executive Sam Bankman-Fried, he added that banks had also used 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 also 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 and that individuals, firms, and large funds (including sovereign countries) will buy Bitcoin to hedge against hyperinflation in the coming weeks.
While he does paint a grim picture of the future economic situation, 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.
As for how this bet will be managed, Balaji concluded by stating he would move $2 million into USDC for the bet. This amount would be split into $1 million for the bet with Medlock and the other $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,”
Mixed Reactions from the Crypto Community
Unsurprisingly, Balaji’s bet drew mixed reactions from the crypto community. While many within the crypto community believe there is a possibility for Bitcoin to exceed $1 million dollars - over a long enough period. However, to achieve a value of over $1 million within the next 90 days is deemed by most as highly unrealitic.
Since Balaji made the bet Friday, Bitcoin’s value has increased slightly, from $26,000 to $28,000 on Tuesday.
Just $972,000 more to go.