The Craziest Bitcoin Bet I’ve Ever Seen
Posted March 21, 2023
Chris Campbell
In 2017, John McAfee predicted Bitcoin would hit $1 million per BTC by 2020.
As if that weren’t bold enough, he made it interesting by adding some (literal) skin in the game: “if not, I will eat my dick on national television.”
(In 2020, when bitcoin barely squeaked past $30,000, he backpedaled on his promise.)
That was a crazy bet. And there were others back in 2017.
Chamath Palihapitiya, an early bitcoin evangelist and former Facebook executive, made the case for $1 million bitcoin -- but gave himself a 20 year window.
Similarly, Harold Burger, an AI lead at Selligent Cortex, concluded that bitcoin could hit $1 million no earlier than 2028 and no later than 2037.
Wences Casares, a member of Paypal’s board of directors, made the same prediction. But he upped the ante: it would happen in 5-10 years.
Raoul Pal, a former Goldman Sachs hedge fund manager, also said it would only take five years. (That was in 2020.)
Again. Crazy bets.
But last week, I saw the craziest Bitcoin bet ever. And this time, there’s (figurative) skin in the game.
$1 Million BTC in 90 Days
Balaji Srinivasan is an entrepreneur and an investor.
He was the former chief technology officer at Coinbase, a former general partner at Andreessen Horowitz, and he also has a number of nine figure exits as a founder of companies.
Last week, he bet $1 million US dollars that Bitcoin will be worth $1 million in 90 days or less. He’s so confident, in fact, the other side of the bet only had to put up 1 BTC -- at 40:1 odds.
To be clear, his bet is more about the dollar than Bitcoin. Balaji is betting that trillions of new dollars will devalue the dollar, leading to hyperinflation. The rush out of the dollar and into Bitcoin will cause it to skyrocket to $1 million.
Srinivasan argues that central banks, regulators and the banks themselves knew a huge crash was coming -- and that Silvergate, Silicon Valley Bank, and Signature are just the tip of the iceberg.
“Just as in 2008,” he wrote, “the bankers lied. This time, the central bankers, and the bank regulators have lied to all dollar holders and depositors.”
He argues that the Fed’s guidance is to blame. In December 2020, the median interest rate estimate from the Fed was 0.1%.
Instead we got 4.75% in 2023.
“So,” says Srinivasan, “any bank that bought long-term bonds on that Dec 2020 guidance got destroyed.”
But is this crisis big enough to send the US dollar into a hyperinflationary spiral? And, if it does, will Bitcoin really be the biggest benefactor?
What Would it Take?
For bitcoin to hit 1 million dollars, its market cap must reach $20 trillion -- twice as big as gold.
For perspective, the high-end estimate of all the money in the world is just over $1 quadrillion. That includes all investments, derivatives and cryptocurrencies. Everything.
If 1.75% of that got sucked into bitcoin, we’d see $1 million per bitcoin. Meaning, if everyone in the world had a little less than 2% of their assets in Bitcoin, it would hit $1 million.
Possible? Yes.
Plausible? Probably not. At least not in 90 days.
Sure, a fiat confidence crisis is coming. But the odds of picking when it’ll happen are slim.
Even Balaji admits his outrageous bet is more about getting attention to the current risks in the system: “I’m just ringing the fire alarm to try to get people to realize the scale of the change that’s about to unfold.”
And, sure, Balaji might be overreacting…
But, in his defense, I’d rather be the guy overreacting before the crisis than after. Those who overreact after get screwed.