Former Coinbase Exec Bets Big On Huge Bitcoin Rise

The US banking crisis has led to rising concerns that the world’s largest economy may experience hyperinflation in the near future. Betting on this possibility is Balaji Srinivasan, a former Chief Technology Officer at Coinbase, who has predicted that Bitcoin (BTC) will hit $1 million over the next 90 days as a result of hyperinflation. 

Hyperinflation refers to a “situation where the prices of goods and services rise uncontrollably over a defined time period”, according to a definition by the Corporate Finance Institute (CPI). Drawing from this definition, it is believed that the cost of living in the United States, and by extension, the rest of the world will rise rapidly over the next couple of months.

Srinivasan is so convinced of this that he has placed a $2 million bet on the crypto market performance. It all started on Friday when a pseudonymous Twitter user James Medlock said, “I’ll bet anyone $1 million dollars that the US does not enter hyperinflation.” The former Coinbase CTO accepted the bet a few hours later. 

Sir, I believe we have ourselves a deal https://t.co/9JYaLNo9Eq

— James Medlock (@jdcmedlock) March 18, 2023

In accordance with the proposed terms, Medlock will win $1 million worth of the dollar-pegged stablecoin USD Coin (USDC) and the 1 BTC Bitcoin’s price fails to reach $1 million by June 17. On the other hand, if Bitcoin is worth at least $1 million by the deadline, Balaji is free to keep both the $1 million in USDC and the 1 BTC.

I will take that bet.You buy 1 BTC.I will send $1M USD.This is ~40:1 odds as 1 BTC is worth ~$26k.The term is 90 days.All we need is a mutually agreed custodian who will still be there to settle this in the event of digital dollar devaluation.If someone knows how to do this… https://t.co/tcuBNd679T pic.twitter.com/6Aav9KeJpe

— Balaji (@balajis) March 17, 2023

In the thread, Srinivasan asked Twitter users to “set up a smart contract where BTC is worth >$1M in 90 days, then I win. If it’s worth less than $1M in 90 days, then the counterparty gets the $1M in USD.” The Bitcoinist further disclosed that he would move another $1 million USDC for a similar bet with someone else “sufficient to prove the point.” This brings Srinivasan’s total bet on Bitcoin’s performance to $2 million.

The differing views that Srinivasan and Medlock have of the future of the US economy is the genesis of their wager as the country’s banking crisis continues to escalate. According to Srinivasan, the impending financial crisis will lead to the deflation of the dollar, resulting in hyperinflation. He defines this in Bitcoin terms as HyperBitcoinisation.

He explains Hyperbitcoinisation as a process where fiat currencies inflate away and the world turns to Bitcoin as digital gold. 

This is the moment that the world redenominates on Bitcoin as digital gold, returning to a model much like before the 20th century. What’s going to happen is that individuals, then firms, then large funds will buy Bitcoin. Then sovereigns like El Salvador (@nayibbukele) and tiny crypto friendly countries.

The former Coibase executive argues that when this happens, the Bitcoin price will rally to $1 million. Conversely, Medloc believes that the US economy will not experience hyperinflation. 

Bitcoin Price Surges Into The Weekend

As the wager was taking place, Bitcoin price soared as much as 12% to hit highs of $27,834, levels last seen in mid-June last year. This was approximately 40% over the last 10 days.

At the time of writing, the crypto was hovering around $27,226 with a live market capitalization of $526 billion, marking a 66% growth in 2023, according to data from CoinMarketCap. This means that Bitcoin has performed better than bank stocks on Wall Street and fears over a global banking crisis escalate. 

The moving averages were facing up and the Relative Strength Index (RSI) was positioned at 69 close to the overbought region. This suggested that the Bitcoin uptrend was strong. 

In addition, the Moving Average Convergence Divergence (MACD) indicator was moving upwards with the buy signal sent on March 13 still in play. This means that the pioneer cryptocurrency was still bullish and would move higher to bring $30,000 into the picture.

Turning $30,000 into support would confirm a bullish breakout for the largest crypto by market capitalization, validating the Hyperbitcoinization scenario.  

BTC/USD Daily Chart

Also, note that the Bitcoin price has shifted away from United States stocks for the first time in a year. It is up about 65% compared to the S&P 500’s 2.5% gains and the Nasdaq’s 15% decline, according to a report by Cointelegraph.

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