Betting It Big On Bitcoin

TL;DR:

  • Balaji Srinivasan, Coinbase’s former CTO, has made a $1 million bet that Bitcoin’s price will reach $1 million by June 17, 2023, due to hyperinflation caused by the rapid devaluation of the US dollar.
  • The prediction has been met with skepticism from prominent crypto analysts like Adam Cochran, who points to historical data that indicates cryptocurrencies tend to perform better during economic risks rather than system risks.
  • Cochran argues that the COVID-19 pandemic crash demonstrated the limitations of alternative assets as a store of value during system risks, and Srinivasan’s prediction of a significant leap to $1 million within such a short time frame seems far-fetched.

Balaji Srinivasan

Balaji Srinivasan, former CTO of Coinbase, has entered a bet with two individuals that Bitcoin’s price will skyrocket to $1 million by June 17, 2023. Srinivasan has put up $1 million with the pseudonymous Twitter pundit James Medlock and another unnamed person. If Bitcoin fails to achieve this feat, the two individuals would receive $1 million in Circle’s USDC stablecoin each.

Srinivasan predicts that the US dollar will enter a period of rapid hyperinflation, leading the global economy to “redenominate on Bitcoin as digital gold.” He refers to this as “hyperbitcoinization” and believes it is imminent. In this scenario, the market capitalization of Bitcoin would increase from about $549 billion today to around $19.3 trillion, according to CoinGecko.

The bet has sparked discussions on social media platforms, with some prominent crypto Twitter voices supporting Srinivasan’s prediction while others remain skeptical. Venture capitalist Adam Cochran has pointed out that during economic risks, alternative assets like cryptocurrencies tend to perform better than during system risks. Cochran also argues that the COVID-19 pandemic crash demonstrated the limitations of alternative assets as a store of value during system risks.

Srinivasan’s prediction comes at a time when there have been several bank failures in the US, leading to fear and uncertainty in financial markets. While Bitcoin’s correlation to stock indexes like the S&P 500 and Nasdaq remains significant, some on Twitter are calling it the “The Great Decoupling” given Bitcoin’s recent surge past $28,000 as Wall Street wavers.

Some skepticism

Venture capitalist Adam Cochran is skeptical of Balaji Srinivasan’s recent bet on Bitcoin reaching $1 million by June 17, 2023. Cochran points to historical data indicating that alternative assets like cryptocurrencies tend to perform better during economic risks than system risks. Additionally, Cochran argues that the COVID-19 pandemic crash demonstrated the limitations of alternative assets as a store of value during system risks.

Cochran highlights that the Bitcoin rally from 2020 to 2022 saw a 547% increase, while the 2017 rally, which occurred at much lower prices, only resulted in a 1,105% gain. In light of these figures, Srinivasan’s prediction of a significant leap to $1 million within such a short time frame seems far-fetched. Cochran also points out that when the entire system is at risk of collapsing, the value of alternative assets becomes irrelevant. The analyst draws on the example of the stock market crash on Feb. 20, 2020, when the world was grappling with the onset of the pandemic. During this period, Bitcoin’s price plummeted by more than 60% from its peak.

Cochran highlights that the Bitcoin rally from 2020 to 2022 saw a 547% increase, while the 2017 rally, which occurred at much lower prices, only resulted in a 1,105% gain. In light of these figures, Srinivasan’s prediction of a significant leap to $1 million within such a short time frame seems far-fetched. Cochran also points out that when the entire system is at risk of collapsing, the value of alternative assets becomes irrelevant. The analyst draws on the example of the stock market crash on Feb. 20, 2020, when the world was grappling with the onset of the pandemic. During this period, Bitcoin’s price plummeted by more than 60% from its peak.

While Srinivasan’s prediction has been met with skepticism, he is not alone in predicting that the price of Bitcoin will reach $1 million. In January 2022, Cathie Wood’s ARK Invest estimated that Bitcoin could exceed $1 million by 2030, saying the network “is likely to scale as nation-states adopt [Bitcoin] as legal tender.” Moreover, CoinDesk Learn Editor Ollie Leech has said that he believes Bitcoin is on a path toward continued financial viability, predicting that it will eventually hit $1 million based on its current trajectory.

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