Former Coinbase head Balaji Srinivasan bet on Friday that the price of Bitcoin will benefit from a rapid devaluation of the US dollar in the next three months and will rise rapidly, reaching $1 million by June 17.
Srinivasan placed a bet with two individuals on the same day: Twitter commentator James Medlock and another unnamed person. If Bitcoin fails to make what would be these historic gains, they will each receive $1 million in stablecoin USDC from Circle.
The bet is part of Srinivasan’s view that the global economy is on the verge of rapid change, which he has dubbed “hyperbitcoinization.” He predicts that the US dollar will enter a point of rapid hyperinflation, and the global economy will then “define Bitcoin as digital gold.”
In this scenario, the market capitalization of Bitcoin — already the largest cryptocurrency — would increase to around $19.3 trillion from around $549 billion today, according to CoinGecko. For comparison, the value of the US stock market was just over $40.5 trillion by the end of 2022, according to Siblis Research.
Srinivasan’s prediction comes amid a series of US bank failures that have injected fear and uncertainty into financial markets. And even though Bitcoin’s correlation with stock indices like the S&P 500 and the Nasdaq remains significant, some on Twitter are calling it “The Great Decoupling” given Bitcoin’s recent surge past $28k while Wall Street has fluctuated.
The bold bet inspired lengthy Twitter threads from some of the social network’s most prominent voices, including Bitcoin entrepreneur and educator Jimmy Song and venture capitalist Adam Cochran, who investigated just how realistic the prediction could be.
Referencing the performance of cryptocurrencies during the start of the coronavirus pandemic in 2020, Cochran said that Bitcoin would need a more extreme catalyst than this to overcome the 547% rise seen from 2020 to 2022.
Cochran posited that a collapse of the US and European banking systems would eventually overshadow Bitcoin’s potential value as an asset, making buying bunkers or food a better use of money than the world’s largest cryptocurrency.
“Simply put, stores of value or alternative assets do well when we doubt the profitability of an economic system rather than the existence of a system,” he told the decrypt via DM on Twitter. “If the system does not exist, we reduce the hierarchy of needs, valuing necessities, not values.”
Cochran said that Srinivasan’s bet is an attempt to put more hope in the crypto market after the industry faced difficult times with the beginning of the crypto winter last year, a time when prices plummeted and several companies in the sector collapsed. He noted that the cryptocurrency and digital asset industry has lost much of the excitement and hope it brought people.
“They’re hungry to get that back,” he said. “But it is disappointing to see this fueled by an unrealistic gamble in such a risky macro environment.”
Betting against hyperinflation
Other voices, such as Song, seemed to support the ideas expressed by Srinivasan’s bet, claiming that Bitcoin could be of some use during an existential crisis for the financial system as it is known today.
“Bitcoin will play a crucial role in mitigating some of the catastrophic effects,” he said. “As a strictly limited currency, Bitcoin offers a much better store of value, cushioning the impact of hyperinflation.”
Matt Levine, columnist for Bloombergchimed in on Saturday to ask what could be considered a direct question: If Srinivasan thinks Bitcoin will reach $1 million in 90 days, why would he use the money to place a bet on it instead of just buying it? Bitcoin?
Levine said in a subsequent Tweet that Srinivasan’s move could be an attempt to “manipulate the (Bitcoin) price” based on the responses he received. Others expressed the idea that Srinivasan could have made the bet as a way to bring himself and Bitcoin exposure.
Srinivasan’s net worth is estimated to be around $150 million, according to Datawallet. He joined Coinbase after a company he co-founded called Earn.com — which rewarded users with digital assets for completing small tasks — was bought by Coinbase.
Srinivasan worked at Coinbase for around 14 months before leaving the exchange in May 2019. Among the accomplishments listed on his LinkedIn profile, he was responsible for organizing the “commercial and technical” portion of Circle’s USDC stablecoin launch.
Srinivasan is not the only person who has envisioned a price of $1 million for Bitcoin. In January 2022, “popstar” investor Cathie Wood of ARK Invest estimated that Bitcoin could pass $1 million by 2030, saying that the network “will likely grow as nation-states begin to adopt ( Bitcoin) as legal tender.”
*Translated by Gustavo Martins with permission from decrypt.