Coinbase’s former CTO Balaji Srinivasan wagered on Friday that the price of Bitcoin will benefit from a rapid devaluing of the U.S. dollar in the next three months, skyrocketing to $1 million by June 17.
Srinivasan entered a bet with two individuals that same day, ponying up $1 million with the pseudonymous Twitter pundit James Medlock and another unnamed person. If Bitcoin fails to notch what would be historic gains, the two would receive $1 million in Circle’s USDC stablecoin each.
The bet is part of Srinivasan’s view that the global economy is teetering on the edge of rapid change, which he dubbed “hyperbitcoinization.” He predicts the U.S. dollar will enter a point of rapid hyperinflation, and the global economy then “redenominates on Bitcoin as digital gold.”
In this scenario, the market capitalization of Bitcoin—already the largest token—would increase to around $19.3 trillion from about $549 billion today, according to CoinGecko. For comparison, the value of the U.S. stock market was just over $40.5 trillion by the end of last year, according to Siblis Research.
Srinivasan’s prediction comes amid a series of bank failures in the U.S. that’s injected fear and uncertainty into financial markets. And even though 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.
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, who delved into how realistic the prediction could be.
Referencing the performance of cryptocurrencies during the onset of the coronavirus pandemic in 2020, Cochran said that Bitcoin would need a catalyst more extreme than that to outdo the 547% rally seen from 2020 to 2022.
The bet here, is that within 90 days, Bitcoin will reach a price of $1M USD.
Or around a 3600% gain within the next 90 days.
To put that in perspective, the rally from 2020 - 2022 was only 547% and the 2017 rally at far lower prices was only 1105% gain. pic.twitter.com/7OZZHXNgYX
— Adam Cochran (adamscochran.eth) (@adamscochran) March 18, 2023
Cochran posited that a collapse of the United States and Europe’s banking systems would ultimately overshadow the potential value of Bitcoin as an asset, making bunkers or beans a better use of money than purchasing the world’s largest cryptocurrency.
“Simply put, stores of value or alternative assets do well when we doubt the profitability of an economic system and not the existence of a system,” he told Decrypt via Twitter DM. “If the system doesn’t exist, we shift down the hierarchy of needs, placing value on necessity goods, not valuables.”
Cochran said Srinivasan’s wager is a bid for hope in the crypto market after the industry faced tough sledding as crypto winter set in last year, a time when prices plummeted and numerous crypto firms collapsed. He noted that the digital assets industry lost a lot of the excitement and hope that brought people in.
“They are hungry to have that back,” he said. “It’s just disappointing to see it fueled by an unrealistic bet in such a risky macro environment.”
Other voices, such as Song, appeared supportive of ideas expressed Srinivasan’s bet, claiming Bitcoin could have some utility during an existential crisis for the financial system as it’s 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, dampening the impact of hyperinflation.”
5/🌐 Despite the daunting situation, Bitcoin will play a crucial role in mitigating some of the catastrophic effects. As a strictly limited currency, Bitcoin offers a much better store of value, dampening the impact of hyperinflation.
— Jimmy Song (송재준) (@jimmysong) March 19, 2023
Bloomberg’s Matt Levine chimed in on Saturday to ask what could be considered a straightforward question: If Srinivasan thinks Bitcoin will reach $1 million in 90 days, why would he use the money to make a bet about it as opposed to just buying Bitcoin?
the replies are all “no, he’s printing a futures trade way above market to manipulate the price up” which is not better
— Matt Levine (@matt_levine) March 18, 2023
Levine said in a subsequent Tweet that Srinivasan’s move could be an attempt to “manipulate the price [of Bitcoin] up” based on the replies he received. Others expressed the idea that Srinivasan could’ve made the bet as a way to bring exposure to himself and Bitcoin.
Srinivasan’s net worth is estimated to be around $150 million, according to Datawallet. He had joined Coinbase after a company he co-founded called Earn.com—which rewarded users with digital assets for completing small tasks—was purchased 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 “business and technical sides” of Circle’s USDC stablecoin launch.
Srinivasan is not the only person out there who has envisioned a $1 million price per Bitcoin. In January of last year, 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.”