Balaji Srinivasan, former Coinbase CTO, bet on Friday that the price of bitcoin could benefit from a rapid depreciation of the US dollar over the next three months and reach higher levels by May 17.
Srinivasan made a bet with two people that same day, raising $1 million with pseudonymous Twitter pundit James Medlock and another unnamed individual. If Bitcoin fails to match historical gains, the two would each receive $1 million in USDC stablecoin from Circle.
The bet is part of Srinivasan’s view that the global economy is on the brink of rapid change, which he dubbed “hyperbitcoinization.” He predicts that the US dollar will enter a point of rapid hyperinflation and the global economy will then be “renamed Bitcoin as digital gold.”
In this scenario, the market cap of bitcoin – already the largest token – would increase to about $19.3 trillion from about $549 billion today CoinGecko. For comparison, the US stock market was worth just over $40.5 trillion at the end of last year Siblis research.
Srinivasan’s prediction comes amid a series of US bank failures that are instilling fear and uncertainty in financial markets. And that despite bitcoin’s correlation to stock indices like the S&P 500 and Nasdaq remains significantsome on Twitter are calling it the “great decoupling” given Bitcoin’s recent surge above $28,000 as Wall Street falters.
The bold bet inspired lengthy Twitter threads from some of crypto-Twitter’s most prominent voices, including Bitcoin entrepreneur and educator Jimmy Song and venture capitalist Adam Cochran, addressing how realistic the prediction might be.
Referring to the performance of cryptocurrencies during the outbreak of the coronavirus pandemic in 2020, Cochran said that Bitcoin would need an even more extreme catalyst than this to surpass the 547 percent rally from 2020-2022.
Cochran posited that a collapse in the banking systems of the United States and Europe would ultimately overshadow Bitcoin’s potential value as an asset, making bunkers or beans a better use of money than buying the world’s largest cryptocurrency.
“Put simply, stores of value or alternative assets are good when we doubt the viability of an economic system, not the existence of a system,” he said decrypt via Twitter DM. “When the system doesn’t exist, we move down the hierarchy of needs and value necessities, not valuables.”
Cochran said Srinivasan’s bet is a glimmer of hope for the crypto market after the industry faced a tough sledding last year as the crypto winter hit, a time when prices plummeted and numerous crypto firms collapsed. He noted that the digital asset industry has lost much of the excitement and hope that people were drawn to.
“They’re hungry to get that back,” he said. “It’s just disappointing to see it being fueled by an unrealistic bet in such a risky macro environment.”
Other voices, such as Song, appeared to support ideas expressed by Srinivasan’s wager, claiming that bitcoin could have some utility 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 and cushions the effects of hyperinflation.”
Bloomberg‘s Matt Levine chimed in on Saturday to ask a simple question: If Srinivasan thinks Bitcoin will hit $1 million in 90 days, why would he use the money to bet on it instead of just buying Bitcoin?
Levine said in a subsequent tweet that Srinivasan’s move could be an attempt to “fix the price [of Bitcoin] up” based on the responses he received. Others floated the idea that Srinivasan could have taken the bet to show himself and Bitcoin.
Srinivasan’s net worth is estimated to be around US$150 million data wallet. He had joined Coinbase after Coinbase bought a company he co-founded called Earn.com, which rewards users with digital assets for completing small tasks.
Srinivasan worked at Coinbase for around 14 months before leaving the exchange in May 2019. Among the achievements listed on his LinkedIn profilehe was responsible for organizing the “business and technical side” of Circle’s USDC stablecoin launch.
Srinivasan isn’t the only person out there who envisioned a price of $1 million per bitcoin. In January of last year, Cathie Woods ARK Invest estimated that bitcoin could surpass $1 million by 2030, and said the network “is likely to scale as nation states adopt it.” [Bitcoin] as legal tender”.
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