Former Coinbase CTO Balaji Srinivasan wagered that Bitcoin would reach $1 million in around 90 days or a 3,600% gain within the next three months, backing his prediction on the rapid devaluing of the US dollar during the same period.
The bold bet has received significant traction, but some of the most prominent voices of crypto made it clear that they do not concede with Srinivasan’s take.
Hyperinflation Less Likely
This isn’t the first time Srinivasan has made a controversial proclamation regarding crypto. Saifedean Ammous, for one, believes such a scenario is unrealistic. The Bitcoin Standard author contended that even if the extent of the banking crisis, as claimed by Srinivasan, holds true, it would still be deflationary.
The economist further went on to explain that the money supply reduces when a bank goes bankrupt. As such, if all banks go bankrupt, then a “majority of the money supply is destroyed, which would make hyperinflation less likely, not more likely.”
Ammous said that while central banks will print in response, thereby inducing price inflation, a case of hyperinflation cannot transpire in such a short period of time.
“Hyperinflation is always driven by money supply increases, and if they bail out every single bank depositor, that would just keep the money supply constant, not increase it. Yes, they will likely print more than that to finance increased spending for political purposes, but you’d need an impossibly large amount of printing to bring about hyperinflation in 3 months & history provides plenty of evidence in support of that.”
Ammous further dismissed Srinivasan’s examples of hyperinflation, which purport to demonstrate that inflation can accelerate rapidly in just three months. According to the author, all hyperinflations came at the end of hyperinflationary periods after a relatively slow start.
$1 Million Bet
Srinivasan’s bet was in response to pseudonymous financial expert James Medlock, who placed a $1 million bet that the country would not experience hyperinflation despite the ongoing banking crisis.
Srinivasan, on the other hand, stated that the current banking condition bore a resemblance to the 2008 financial crisis. He went on to argue that around this time, the central bankers, banks, and regulators “lied to all dollar holders and depositors.” On the same day, the American entrepreneur also bet $1 million with another unnamed person. If he loses, the two would receive $1 million in Circle’s USDC stablecoin each.
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