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Is Bitcoin’s Really Going to $1m? Inside Balaji’s Big Bet on BTC

On March 17th, 2023 American entrepreneur and former CTO of Coinbase, Balaji Srinivasan entered into a big $1 million bet. The terms of the bet is that within 90 days, the price of BTC would reach $1 million per coin.

So as of the end of April, a month into the bet, Bitcoin is hovering around $30k per coin.

Needless to say, BTC still has a long way to go in order for Balaiji to win his bet. But on several occasions during the making of the bet and the days following, Balaji has said that the purpose of this bet isn’t really to “win it”.

So why else might someone put $1 million on the line, if they don’t care about the outcome? Furthermore, how realistic is it that the price of BTC reaches $1 million about 60 days from now?

Balaji Srinivasan 1m bet

How Realistic is the Bet?

There is one main factor that could lead bitcoin to relentlessly climb to $1 million per coin in the next 60 days. That is the near-total collapse of the USD and the ceasing of recognition of the USD as the global reserve currency.

Following this, bitcoin only reaches $1 million per coin if the USD is hyperinflated, or if people pile into BTC on their way out of holding USD. With this in mind, Balaji is actually making two bets at the same time.

  1. The collapse of the USD will take place within the next 90 days (from March 17th)
  2. Enough people will choose BTC as a place to store their value

Segmenting the conditions that would make Balaji win the bet is useful in determining the answer to whether or not the bet is realistic.

Will the US Dollar Collapse and De-Dollarization Take Place in June?

The last time the world transitioned from one world reserve currency to another, it didn’t happen all of a sudden. It happened over the course of 30-40 years as the British Pound slowly lost dominance to the United States Dollar.

This was a result of the United Kingdom paying back debts to other countries (namely the US) for back-to-back world wars.

The final nail in the coffin for crowning USD as the world’s choice currency was more or less the establishment of the Bretton-Woods system. The transition from GBP to USD can largely be categorized as a “gradually then suddenly” event.

One could argue that global de-dollarization has been taking place for some time, with one pivot point being 2008. However, I think it is tough to argue that we’re in the final days of de-dollarization.

There have been banks collapsing in the United States, reducing trust in the broader financial system, but the federal reserve has reliably stepped in to patch the bleeding.

A hyperinflationary event happens when broad public trust in the financial system is lost coinciding with massive money printing. The latter can absolutely trigger the former.

Will People Choose BTC in their Flight to Safety?

Moving onto the other segment of the bet, let’s say we do see a hyperinflationary event take place in the next 60 days. What evidence do we have that people will choose BTC over anything else they could put their money into? To answer this question, we need to ask what sort of pain people may have felt during the hyperinflationary event.

Ultimately, a catastrophic event like hyperinflation would trigger people to realize that there is counterparty risk to almost every dollar denominated asset or investment. The main counterparty in question in this scenario would be the Federal Reserve itself.

It would be natural for people to search for an asset with no counterparty risk. That would be Bitcoin.

Some people will buy this narrative and put the work into figuring out Bitcoin, others will not. It really depends on the individual experience of investors and whether or not they even have the means to rapidly shift their allocations.

Bitcoin Unlikely to Reach $1M in June

All said and done, I wouldn’t have made Balaji’s bet. I think it’s extremely unlikely that Bitcoin will reach $1M per coin by June, 2023. With that being said, we need to look a little closer into Balaji’s rationale, as he is a smart person and he must have made this bet for a good reason.

The Bet is a Publicity Stunt

As Balaji points out on Robert Breedlove’s podcast “What is Money”, he loses money no matter the outcomes of the bet. If he thinks BTC will actually go to $1M in 90 days (from March 17th), then he should just buy Bitcoin and claim the gains.

If he wins the bet, then he has $1M with greatly reduced purchasing power than $1M in today’s terms.

In Balaji’s own words, the purpose of the bet is to sound the warning bells. It is a publicity stunt to bring awareness to the crumbling financial infrastructure. From this angle, the whole bet begins to make a bit more sense.

A Winning Outcome

A winning outcome for Balaji in this bet would be a broader discussion of the weaknesses of the financial system and wide recognition of bitcoin as a reasonable alternative and replacement to the USD.

Although difficult to measure, Balaji’s bet has indeed stirred up public discourse around taking Bitcoin seriously as a world reserve asset. One google search on Balaji’s name and his $1M bet will reveal dozens of articles from some of the top media sources.

In terms of public awareness, more people are, and will continue to think about bitcoin and its desirable property of having zero counterparties. Hopefully, this stark contrast between the USD and all other fiat currencies will instill hope and trust in Bitcoin as we navigate these trying economic times.

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About the Author

Keegan Francis

Keegan Francis is a cryptocurrency knowledge expert and consultant. He recognized the opportunity in cryptocurrency early in his career and has been invested in it since 2014. His passion led him to start the Go Full Crypto, a project that documents his journey of totally opting out of traditional financial services. Keegan has been living entirely off of cryptocurrencies since 2019.

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