The former chief technology officer of Coinbase Global Inc., Balaji Srinivasan, said he closed out a losing bet that Bitcoin would reach $1 million within 90 days. The price bet was settled 97% below its target price. As a compromise, Balaji Srinivasan chose to donate a total of $1.5 million to three different entities.
Balaji Srinivasan burns on his bet to prove a point
Mid-March, shortly after the failures of Silvergate Bank, Signature Bank, and Silicon Valley Bank, the former partner at venture capital firm Andreessen Horowitz predicted that a banking crisis would result in a significant devaluation of the U.S. dollar, hyperinflation, and a bitcoin price increase to $1 million by mid-June. He wagered $1 million on his prediction.
On May 2, the former chief technology officer of Coinbase, Srinivasan, stated that the wager had been “closed out by mutual agreement” 45 days in advance. Srinivasan stated that he gave $1 million to two organizations, including the Bitcoin Core development team at researcher Chaincode Labs, in addition to paying $500,000 to a Twitter user named James Medlock, who won the wager.
I just burned a million to tell you they’re printing trillions. I spent my own money to send a provably costly signal that there’s something wrong with the economy and that it’s not going to be a ‘soft landing’ like [Federal Reserve Chair Jerome] Powell promises – but something much worse.Balaji Srinivasan
Balaji Srinivasan reiterated in a Twitter post and a brief video on Tuesday that the purpose of the wager was to demonstrate that fiat currencies, such as the dollar, are in trouble and that these problems will drive up the price of Bitcoin. Bitcoin is approximately 10% higher at $28,827 than when Balaji Srinivasan accepted the wager on March 17.
Despite having donated a total of $1.5 million, Srinivasan remains convinced that hyperinflation will eventually grip the American economy. In his opinion, investors will race to secure the value of their rapidly depreciating dollars in Bitcoin, driving the asset’s price to $1 million very quickly.
I settled the bet ahead of time and donated even more than I had committed […] The reason that I did that is I wanted to tell you in a provable way that there’s something wrong in the economy, and the state isn’t telling you about it […] That is what I am doing at my own expense, I am raising public alarm.Balaji Srinivasan
The traditional finance sector sends uncertainty among investors
The high-profile wager was initiated on March 17 as a result of a dispute between Srinivasan and the pseudonymous Twitter user James Medlock. Medlock initially tweeted that he would bet $1 million that the United States dollar would not enter a hyperinflationary state.
The terms of the wager stipulated that if Bitcoin’s price did not reach $1 million by June 17, Medlock would receive $1 million in the dollar-pegged stablecoin USD Coin and an additional 1 Bitcoin. In contrast, if the value of a single Bitcoin reached $1 million by the same date, Balaji could retain the 1 BTC and $1 million in USDC.
After settling the wager, he mentioned that current U.S. Treasury Secretary Janet Yellen was at the Federal Reserve prior to the 2008 global financial crisis. Still, neither she nor then-Fed chairman Ben Bernanke sounded the alarm. Srinivasan argued that today’s leaders, including Powell, are also in denial.
He emphasized that crises can develop much more rapidly than anyone anticipates. Srinivasan asserted that it took two days for the Fed to print $300 billion after the Silicon Valley Bank failure, two weeks for $500 billion to leave the banking system, two months to go from “patient zero” to national lockdown during COVID-19, two quarters to go from a mild recession to a financial crisis in 2008, and two years for the Soviet Union to fall from superpower to collapse in 1991.
According to CoinGecko, Bitcoin was trading for $28,827 at the time of writing; therefore, its price would need to increase by 3,369% to reach $1 million per coin.