Balaji Srinivasan bitcoin bet

A Silicon Valley Entrepreneur Just Bet That Bitcoin Will Be Worth $1M In 90 Days

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On Saturday morning, Balaji Srinivasan, a successful silicon valley entrepreneur and General Partner at crypto venture capital firm a16z made a stunning bet that the price of a single Bitcoin (BTC) would reach US$1 million (AU$1.5 million) in the next 90 days.

According to Srinivasan, the current global banking crisis will devolve into a full scale meltdown that will see the United States enter into a rapid death-spiral of ‘hyperinflation’ — triggering a subsequent series of events that would render the US Dollar effectively worthless overnight.

In Srinivasan’s eyes, this rapid case of hyperinflation would see investors rush to invest in Bitcoin, as many of its strongest proponents see the cryptocurrency as a hedge against the long-term debasement of fiat currency such as US and Australian dollars.

The bet arose after a disagreement with Coinbase’s current Chief Technology Officer James Medlock. Medlock initially tweeted that he would happily bet US$1 million (AU$1.5 million) on the fact that the US Dollar will not enter any state of hyperinflation.

Srinivasan replied by saying that he would take this bet and front up a whopping US$2 million on Bitcoin. Srinivasan claimed that over the course of the next 90 days, the price of BTC will increase to an astonishing US$1,000,000 as investors rush to protect their assets in Bitcoin.

Unsurprisingly, Srinivasan’s audacious public bet ruffled many feathers from the wider financial community, generating an extremely wide array of responses that ranged from praise to outright derision. On the whole the response from the community was overwhelmingly sceptical.

Nassim Taleb, a successful former options trader and the author of seminal works including The Black Swan and Antifragile took to Twitter to express scathing criticism of Srinivasan’s outlandish wager.

In classic fashion Taleb didn’t mince words, saying that Srinivasan’s bet is “trading against himself” which is something only “lunatics do under the influence”.

Crypto sceptic Molly White wasn’t amused by Srinivasan’s bet either, taking a more tech-focused line of criticism. White took aim at the incentives leading Srinivasan to make such a bet, claiming in a metaphorical way that Balaji had plenty of self-serving reasons to promote Bitcoin as the antidote to a fabricated hyperinflation crisis.

While some — typically fellow Bitcoiners — chose to show tepid support for Balaji’s bold prediction, from a pure numbers perspective it is extremely unlikely that Bitcoin could reach a value of US$1 million per token inside a period as short as 90 days.

This would mean that an asset with a current market capitalisation of US$539 billion would need to grow 3450% in the next 86 days. This means that Bitcoin as a whole would have to grow to an approximate total value of US$185 trillion (AU$273 trillion), making it 75 times the size of Apple — currently the world’s largest company by a large margin.

Balaji’s prediction can be seen as an incredibly successful PR stunt which has generated a good deal of interest in Bitcoin, especially for those seeking to promote the cryptocurrency as a hedge against inflation and devaluation of fiat currencies.

Ultimately however, Bitcoin has failed to act as a successful inflation hedge in the past. As inflation surged around the world over the course of 2022, the price of Bitcoin plummeted — which is just a small slice of historical data to suggest that Balaji Srinivasan’s multi-million-dollar bet may not play out how he imagines it will.