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  • Writer's pictureSarah Dixon

Balaji Gave Up and Paid Early on Bet That Bitcoin Would Reach $1 Million in 90 Days

Tech mogul and cryptocurrency advocate Balaji Srinivasan has closed out his $1 million bet on Bitcoin reaching $1 million by mid-June.

On Tuesday, the former chief technology officer at Coinbase revealed that he has donated $1.5 million, $500,000 more than required, to close the bet 45 days ahead of the deadline.

“I just burned a million to tell you they’re printing trillions,” he tweeted Tuesday afternoon.

“I spent my own money to send a provably costly signal that there’s something wrong with the economy, and that it’s not going to be a ‘soft landing’ like [Federal Reserve Chair Jerome] Powell promises – but something much worse.”

In closing out his bet, Srinivasan made donations of $500,000 each to Bitcoin Core development at Chaincode Labs, Give Directly, and the pseudonymous Twitter user who agreed to bet $1 million that the US would not experience hyperinflation.

The crypto advocate made the bold bet in mid-March and cited a potential banking crisis that could trigger hyperinflation and a significant devaluation of the US dollar.

Srinivasan also argued that current leaders, including US Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell, are similarly in denial about the potential for crises to move quickly.

He cited examples of past crises, such as the financial crisis of 2008, the COVID-19 pandemic, and the collapse of the Soviet Union in 1991, to support his argument.

Economists Dispute Srinivasan’s Arguments

Some economists, such as former Federal Reserve staffer Danielle DiMartino Booth, have disputed Srinivasan’s interpretation of events.

Back in March, Booth argued that the quick increase in the Fed’s balance sheet after the failure of Silicon Valley Bank was not money printing but rather a surge in Federal Reserve discount window and other borrowings by the nation’s banks.

“Discount Window borrowing increased $140.5 billion in one week taking total to $152.8 billion,” she said, adding that an additional $11.9 billion was borrowed from the Fed’s new Bank Term Funding Program.

Bitcoin is currently trading at about $29,000. That’s about a 10% gain from the $26,000 mark when Srinivasan made the bet.

However, to win the wager, Bitcoin would have had to compound at about 4% per day for the full 90 days, reaching $1 million by June 17.

Bitcoin Activity Increases as Another Bank Collapses

Over the weekend, Bitcoin recorded a new all-time high for the number of daily transactions in the wake of JPMorgan Chase’s acquisition of First Republic Bank.

As reported, the daily number of Bitcoin transactions surged beyond 568,300 on Sunday, nearly 78,000 more than its previous peak during the top of the 2017 bull run.

The surge in Bitcoin’s use could be indicative of the cryptocurrency’s possible role in an increasingly dysfunctional economy amid the current chaos roiling the US banking system.

Bitcoin also saw a sharp surge in value back in March after the collapse of SVB and two other US lenders.

At the time, Yassine Elmandjra, an analyst at Ark Invest, argued that the rally was a sign of Bitcoin’s value as a safe haven asset.

“In the face of the U.S. and European banking crises, bitcoin’s price appreciation suggests that lax regulatory oversight had no impact on the decentralized, transparent, and auditable crypto asset ecosystem.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.


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