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Former Coinbase CTO Balaji Srinivasan took Crypto Twitter by storm over the weekend with his $1M bet that hyperinflation will make the price of Bitcoin break through $1M US dollars within 90 days. On March 17th, James Medlock, a tax enthusiast from Northern California, posted on twitter that he is ready to bet anyone $1 million dollars that the US will not enter hyperinflation.
<source: twitter>
Although many people make such kind of predictions, this started a frenzy, when Balaji Srinivasan decided to take the bet and made a bold statement on 18th March that he expects the US economy to hit hyperinflation soon. If Bitcoin fails to notch what would be historic gains in 90 days, Medlock and one other person would receive $1 million in Circle’s USDC stablecoin each.
<source: twitter>
To give some perspective to his background, Balaji Srinivasan is an angel investor, tech founder and bestselling author of The Network State (in which he argues that technology will usher in the end of the nation-state era). His experience spans from being the CTO of Coinbase and a general partner at venture firm Andreessen Horowitz, to co-founding several companies that were later acquired.
He believes that the bankers have lied as they did in 2008 and there aren’t enough reserves in the banks to cover withdrawals. He states that this has happened as the banks used the deposits to buy the US treasury bonds which he refers as “the ultimate shitcoin”
He further stated that anyone who bet on long-term Treasuries got killed in 2021 and anyone who bets on short-term Treasuries is going to get killed in 2023. The below image shows that banks are currently sitting on ~ $620 billion in losses on investment securities.
<source: FDIC>
From a purely logical perspective, we believe Bitcoin will not reach $1 million in 90 days. From $535 billion now, the market Cap has to rise around $19.3 trillion in 3 months which is insane, as even the total U.S. stock market is ~ $40.511 trillion. The recent rally in BTC prices implies the “Bitcoin is a hedge against the collapse of traditional financial institutions” narrative is back again.
In a span of weeks, three prominent banks (SVB, Silvergate & Signature) folded either due to federal intervention or bank run. In order to protect other banks, experts believe that the government may start printing massive amounts of money again, which may lead to hyperinflation and have termed it as “Stealth Quantitative Easing”. This narrative has caused a rally for Bitcoin and BTC has seen a 12.96% price increase in the past week.
<source: CMC>
As global financial markets continue to experience uncertainty and fluctuations caused by the ongoing banking crisis, the crypto market is experiencing an unexpected resurgence. The narrative around Bitcoin as a safe haven in the midst of bank failures had already started taking hold last week prior to the buzz around this bet as the cryptocurrency rose from below $20k to $28k on Sunday. This has also led to FOMO for common investors.
<source: twitter>
We believe that the contagion caused by centralized counterparties has elevated Bitcoin’s value propositions of decentralization, auditability, and transparency and remain optimistic about the future outlook for Bitcoin and the crypto market.
Use promocode TNM51 at www.giottus.com/profile#promo after registration to get Rs.51 worth free Bitcoin.
Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.