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Bitcoin at $1 million in 90 days? Balaji thinks so!

Former Coinbase CTO made a bet that the US dollar will enter hyperinflation and Bitcoin will be worth over $1 million in 3 months.

While the correlation between the stock market and cryptocurrencies was significantly high throughout 2022, it recently reversed. The stock indices stagnated in the last few weeks, but Bitcoin skyrocketed. 

The recent price explosion is, according to many people, supported by the ongoing banking crisis. The implosion of several banks like Silicon Valley Bank or Silvergate made investors dump their stocks and move to Bitcoin. 

Related article: Bitcoin expert sees the digital gold at over $100,000 by next year

If this bullish momentum keeps up, things will definitely get interesting. Balaji Srinivasan, a Bitcoin investor, and former Coinbase CTO, showed his over 830,000 followers why Bitcoin is poised to hit $1,000,000 in 90 days. Is this an actual prediction or just a way to get more followers? Let’s see.

Crypto Twitter on fire

Crypto Twitter (CT) has been crazy for the past few days. The banking crisis helped Bitcoin to surge to levels not seen since June 2022, and people are getting overly optimistic all over again. A Twitter user called “Wicked,” shared a chart of where he thinks Bitcoin is going soon (Balaji retweeted this photo).  

Bitcoin logarithmic chart, source: twitter.com

But it all started with James Medlock, a Twitter user, who tweeted that he would bet a million dollars that the US won’t get into hyperinflation. Balaji replied he’d take that bet. Now everyone’s crazy over this. 

A $1 million bet

Balaji shared details in his tweet regarding the bet, implying the odds are 40:1. Balaji made sure it looks all clean as he stated “All we need is a mutually agreed custodian who will still be there to settle this in the event of digital dollar devaluation.”

Balaji’s bet Bitcoin will hit $1 million, source: twitter.com

While Balaji has been trying to get a lot of attention with his bet, a Twitter user, Matt Levine, pointed out some facts. Why bet $1 million that Bitcoin will hit a price of $1 million in 3 months when he can buy 35 (at a current price of $28,000) bitcoins and make much more later on? Touché.  

On March 17th, Balaji accepted the bet on Twitter after detailing his thoughts and reasoning there. He likens the present banking crisis to the one in 2008 but says this time, central banks, banks, and regulators have misled every dollar holder and depositor. 

Balaji claims that the banking crisis has gone beyond fractional reserves since financial institutions do not have adequate cash on a market-to-market basis to cover withdrawals. He claims that regulators knew that banks were literally bankrupt before the catastrophe, yet they let them keep operating nevertheless. 

Also read: Unknown trader made $4 million from USDC depeg in 2 days- here’s how

He referred to the downfall of the former FTX CEO Sam Bankman-Fried (SBF) as an example of the problems that might arise when banks use consumer deposits to purchase “questionable bonds” in the same way he used customers’ deposits to “buy shitcoins.”

What would happen if Bitcoin hit $1,000,000?

While there are many good points mentioned by Balaji, one million dollars per bitcoin would mean a 3,500% price increase in less than 90 days. The last time Bitcoin jumped so drastically was probably in its early beginnings when its market cap was a few million dollars.

The price explosion of this size would mean an increase of Bitcoin’s market cap from the current $545 billion to $19 trillion – 15x the size of the whole crypto market cap (in less than 90 day). Of course, the value of US dollars would be smaller because of the USD devaluation by the Fed.

Read more: https://www.investro.com/top-crypto-memes-that-everyone-should-know-part-ii 

Although many Bitcoin maximalists wish for this to happen, it could also have a fatal impact. Most people with no Bitcoin could only afford to buy a few satoshis if it were to suddenly cost $1 million. But more importantly, it would affect miners and energy prices.

Hypothetical impact on mining 

A Twitter user, Shaun Connell, shared his view on how such a drastic price increase could impact Bitcoin miners. While the current hashrate of 325 eh/s in S19 costs $100/MWh, the price jump of 35x would result in $3,500/MWh.

There are certain energy price caps for crypto mining, so the mining operations could get less efficient and probably unprofitable. Bitcoin’s tokenomics were set up to be favorable for the miners, because they are the ones who keep the blockchain running. Thus, the right environment is important for Bitcoin miners for the price of Bitcoin to keep on its long-term upward trajectory. 

Final thoughts

Imagining Bitcoin to hit $1 million in only 90 days is like predicting that gold may hit $10,000 in 3 months. Do you think that is realistic? While $1 million per bitcoin may be a reality in a few years, it is definitely not happening that fast. 

That is why you shouldn’t get FOMO (fear of missing out) around Bitcoin and FUD (fear, uncertainty, and doubt) for the US dollar. Bitcoin is on its track to appreciate in the long run as the US dollar is on its track to devalue over time, but it probably won’t happen so fast. 

Enjoy some of the best recent tweets regarding Bitcoin’s price explosion and Bajali below. 

I got into financial markets by accident in 2012 and started with Forex trading. Later in 2017, I started investing in stocks in cryptocurrencies and began writing articles profess...

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