Bitcoin to $1 Million in 90 Days and Dollar Destroyed – Big Bet on Crypto Prices Driven by Banking Crisis and Hyperinflation
03/18 update below. This post was originally published on March 17
BitcoinBTC, ethereum and other major cryptocurrencies have rallied this week amid a banking crisis that could be about to cause a massive earthquake from the Federal Reserve.
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The Bitcoin price has topped $27,000 per bitcoin, up over 30% since this time last week, reaching a level it hasn’t seen since last June. The Bitcoin boom has also sent the price of ethereum and other major cryptocurrencies skyrocketing.
Now, after JPMorgan analysts said the Fed’s new bank backstop program could inject up to $2 trillion into the financial system, tech investor and former CoinbaseCOIN tech officer Balaji Srinivasan has warned that the latest banking crisis could trigger hyperinflation in the U.S. — and advised people to “buy bitcoin now and get your coins from exchanges.”
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03/13 update: Srinivasan has bet $1 million that the bitcoin price will be over $1 million in just 90 days, which means a 3600% bitcoin price increase by June 16.
“Why would it happen so quickly? Well, hyperinflation happens quickly,” Srinivasan posted in a lengthy tweet explaining why he is so confident. “We’ve seen digital pandemics (COVID), digital riots (BLM) and digital bank runs (SVB). It will all happen very quickly when people check what I’m saying and see that the Federal Reserve has lied about how much money is in the banks. All dollar holders are destroyed.”
Srinivasan had replied to a Twitter user with the handle @jdcmedlock who posted that he would “bet anyone $1 million that the United States will not go into hyperinflation.” Srinivasan outlined the terms of the bet so that if bitcoin is worth more than $1 million in 90 days, he wins and if it’s worth less “the counterparty gets $1 million … We have to define hyperinflation in [bitcoin] vs. [U.S. dollars] terms because all other fiat currencies can and will be inflated.”
The Bitcoin – set up on behalf of @jdcmedlock by pro poker player Isaac Haxton— and Srinivasan’s dollars will be kept in check by crypto influencer and podcast host Jordan Fish, who tweets under the handle @Cobie.
“I’m moving $2 million to the USDC for the effort,” Srinivasan said. “I will do it with [@jdcmedlock] and another person, sufficient to prove the point.”
“The central bank, the banks and the banking regulators have bankrupted us all,” Srinivasan, who has been credited with calling the severity of the Covid-19 pandemic before healthcare, posted to Twitter.
“They hid their insolvency from you, the depositors. And they are about to print $2 trillion to hyperinflate the dollar. In the digital age, this will happen very quickly. So buy bitcoin now and get your coins off the exchanges.”
Last week, Silicon Valley Bank (SVB), a regional bank that specialized in lending to start-ups and technology companies, was closed after panic among depositors that it was insolvent. Signature Bank, a crypto-friendly bank, was also shut down by regulators, a move that may have been due to concerns over its anti-money laundering controls.
Former U.S. Rep. Barney Frank, a co-author of the Dodd-Frank banking regulation law, sat on Signature Bank’s board and said he believes the bank was shut down to warn against doing business with crypto companies. “This was just a way of telling people, ‘We don’t want you dealing with crypto,'” Frank added AP.
Earlier this week, another crypto-friendly bank, Silvergate, collapsed due to fallout from the shock implosion of major crypto exchange FTX last year.
The collapse of SVB was the biggest US bank failure since the 2008 financial crisis and sent shockwaves through the financial system as customers tried to withdraw money and authorities tried to restore confidence.
Over the weekend, the US Treasury Department, the Federal Reserve and the Federal Insurance Deposit Corporation (FDIC) said they would refund all deposits with both SVB and Signature.
“The use of the Fed’s term funding program is likely to be large,” JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a note to clients seen by Bloomberg.
Srinivasan said he was sending out a “bit signal,” offering to give away $1 million in bitcoin, divided among 1,000 Twitter users who respond to his post, to draw attention to the banking crisis and what he fears is looming hyperinflation.
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“The whole banking system is lying to you about solvency,” Srinivasan said. “They’re trying to make sure you don’t go out to bitcoin before they print the money.”
Srinivasan added that the “speed of hyperinflation” could catch “people off guard.”
The unprecedented action by the Fed comes as it continues to battle inflation that rose to a 40-year high last year. The Fed has raised interest rates at an unprecedented pace in an attempt to curb inflation, but has also put banks under pressure.
“Bitcoin benefits from full-fledged government-guaranteed deposit insurance, from inflation falling back to the 3% level, which allows the central bank to become less hawkish, and from regulatory overhang that has affected stablecoins such as BUSDBUSD and more recently, USDCUSDC,” wrote Markus Thielen, head of research and strategy at Matrixport, in an email message.
“Bitcoin loves liquidity and is the primary crypto-weapon of choice when those liquidity sluices are exchanged – like now.”
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