On March 17, Balaji Srivanisan made a bold statement that the US economy would enter hyperinflation in three months, predicting banks to go bust and Bitcoin to reach $1 million before June 17.
The wager was first initiated by pseudonymous Twitter user James Medlock, who bet $1 million that the US won’t experience hyperinflation — which is indeed a no-brainer deal, considering how Medlock won’t pay more than the price of a loaf of bread if he’s wrong, as one follower put it. Surprisingly, the former Coinbase exec not only accepted the bet, but also claimed that hyperinflation would catapult Bitcoin to $1 million as the world “redenominates on Bitcoin as digital gold.”
Under the terms of the bet, Balaji will send $1 million in USDC stablecoin to Medlock and another unnamed person if Bitcoin fails to reach $1 million by June 17. If Bitcoin, by any chance, does reach the mark, Balaji will receive 1 BTC from both individuals and can keep his — likely worthless by then — $1 million USDC.
“Terms of the bet: ideally someone can 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,” Balaji explained in his lengthy thread.
As expected, Balaji’s tweets generated huge social media buzz — and many other high-follower accounts expressed their willingness to bet against his grim outlook for the global economy, including AI researcher Eliezer Yudkowsky, poker champion Liv Boeree, and on-chain sleuth ZachXBT. Unfortunately for the ones hoping for free money, Balaji is no longer accepting applications, as two people is “sufficient to prove the point.”
“Everyone else should just go buy Bitcoin, as it'll be much cheaper for you than locking one up for 90 days,” he added.
Balaji’s prediction comes amid the banking crisis triggered by the stunning one-week collapses of three US banks, Silvergate Bank, Silicon Valley Bank, and Signature Bank.
But even given the current uncertainty around the global banking system, the prospect of the US economy collapsing in a matter of months looks, frankly, insane — and the predictions market Polymarket seems to capture well the absurdity of Balaji’s wager. At the time of writing, outcome shares for BTC being worth more than $1 million on June 17 trade at $0.03, while “no” shares are priced at $0.98, reflecting how the community views the probability of the expected outcomes.
That being the case, the question arises: why would Balaji, a renowned crypto OG, place a bet that has odds of 2/98, according to the wisdom of crowds? As one would expect, numerous crypto experts weighed in to crack the puzzle.
As venture capitalist Adam Cochran pointed out, to fulfill Balaji’s prediction, Bitcoin would need to climb 3600% within the next 90 days. To put that into perspective, the 2020-2021 rally was just 547%, which means that the BTC price would need a far more serious catalyst than a global pandemic that shut entire sectors of the economy.
Indeed, the collapse of the global banking system can possibly exceed pandemic damages — but it would also diminish the potential value of Bitcoin as a “safe haven” asset, Cochran warned.
“Any store of value only matters, if at some point you can unstore said value back into a system. No more system, no more value,” he tweeted, adding that bunkers and beans would be more valuable assets than Bitcoin in Balaji’s scenario.
Ethereum bull and Daily Gwei host Antony Sassano seems to share the same viewpoint as Cochran, stating: “I do wonder if the people cheering on the collapse of fiat and the traditional banking system understand what that means.”
“No, your crypto coins aren't going to protect you from a complete breakdown of society. If you want to roleplay this future today, you can go live in Haiti,” he added.
According to Edgy, the author of The DeFi Edge newsletter, Balaji’s gamble is nothing but a carefully crafted marketing stunt — and given his estimated $1.5 billion net worth, one million is a reasonable price to pay for his media tour and projected returns from the BTC price pump.
“He has the credibility of getting the COVID call right and is the former CTO of Coinbase. No chance his prediction will come true. But my fucking god, we have someone insane enough to want to be this cycle's main character,” Edgy said.
