Bitcoin: Coinbase’s former CTO makes a $1 million BTC price bet in 90 days – Realistic or stupid?
Balaji Srinivasan, Coinbase’s former CTO reportedly made a bet with Twitter pundit James Medlock and another unnamed person on Friday that Bitcoin would hit $1 million in 90 days. As part of the agreement, Srinivasan will give $1 million in Circle’s USDC stablecoin to each party if his prediction fails. The former Coinbase CTO believes that the global economy is going through some interesting changes which he referred to as “hyperbitcoinization.”
According to him, the global economy will soon “redenominates on Bitcoin as digital gold,” as the US Dollar is on the verge of entering a point of hyperinflation. This simply means that the market capitalization of Bitcoin which is around $536 billion as of the time of writing would increase to around $19.3 trillion. In comparison, Siblis Research published that the value of US stocks was $40.5 trillion as of the end of 2022. The prediction is also said to be inspired by the recent failure of US banks causing fear and uncertainty in the financial market. While some crypto investors appear to be moved by this prediction, some analysts have heavily criticized Srinivasan, calling the forecast outrageous.
Analysts criticize the $1 million Bitcoin prediction
Bitcoin entrepreneur and educator Jimmy Song and venture capitalist Adam Cochran took a critical look at the prediction and observed that the asset would have to rise by 3600 percent in 90 days to match the $1 million trading price. According to him, the 2020 to 2022 rally was only 547 percent, and the 2017 rally was around 1107 percent. Cochran believes that Bitcoin would need a more extreme catalyst than the “banking failure” to hit that price. Cochran argues that the collapse of the banking system would rather overshadow the potential value of Bitcoin.
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. If the system doesn’t exist, we shift down the hierarchy of needs, placing value on necessity goods, not valuables.
Bloomberg’s Matt Levine also responded to Srinivasan with a very interesting question. While admitting that he is not the world’s greatest trader, Levine questions why he did not use the $1 million to buy Bitcoins but rather decided to use it for betting. According to him, this could be a calculated attempt to manipulate the price of Bitcoin based on the replies he receives.
Peter Brandt joins the conversation
Veteran trader and analyst Peter Brandt has strongly opposed the prediction by weighing in on the recent CME gaps in Bitcoin’s price. CME shows the difference between the closing price and the opening price (the following day) of a financial instrument on the Chicago Mercantile Exchange (CME). Because traders attempt to take advantage of the difference, the gaps can influence the Bitcoin price. He observed that there are two significant unfilled gaps at the $19,000 level. This suggests that there could be a decrease in the short term, meaning, it is important to go short on Bitcoin.