Crypto Evangelist’s Big Bitcoin Bet Comes to a Satisfying Conclusion
The best advice you can get when buying bitcoin or investing in crypto (other than, you know, “don’t”) is the same advice you get when going to a casino: never bet more than you’re willing to lose. Balaji Srinivasan, the former chief technical officer of Coinbase, must have been more than willing to part ways with fat stacks after he gave up on hopes bitcoin would ever reach prices equal to $1 million.
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“I’m not a trader, I’m not John McAfee, and I’m not in the bait of publicly burning a million bucks,” Srinivasan wrote in a Tuesday tweet. Unfortunately, that’s what he did, and more than a month earlier than he stated he originally intended to.
Srinivasan, a former partner at venture capital kingmakers Andreesen Horowitz, made a public bet back in March that bitcoin would reach $1 million in value. His named his gamble shortly after the collapse of Silicon Valley Bank and Signature Bank, predicting the economy would go bankrupt along with hyperinflation of the U.S. dollar, all of which would see the price of bitcoin skyrocket. Srinivasan originally predicted it would take 90 days for the value of bitcoin to balloon while the entire U.S. economy flatlined, though he later told CoinDesk it could take “900 days or even 90 months… I don’t have a 100% probability on it.”
His attempt to short the entire U.S. economy didn’t exactly pan out, and he called his own bluff late on Tuesday. He said he donated $1.5 million in total, which amounted to $500,000 to three entities including the East African direct money nonprofit GiveDirectly, bitcoin node developers Bitcoin Core, and the Twitter user James Medlock. The account previously made its own $1 million bet that the economy would not enter hyperinflation, though the user admitted Tuesday that they made the tweet as a kind of joke.
Still, Srinivasan continued to claim that there was “something wrong with the economy, and the state isn’t telling you about it.”
His video explaining his reasoning is more like a hungover person trying to explain why they tried to drunkenly consume their friend’s house plant than any cogent argument about the state of the economy. He referred to the run-ups of economic calamities of yesteryear, like the months before the start of the 2008 financial crisis and the start of the covid pandemic in 2020, for why he chose his few-month time frame. Then he cited a morass of articles pointing to economic fears of an incoming bond and banking crisis. He rambled on, citing the well-known prognosticator Elon Musk and the waning numbers of millionaires coming to the U.S. as signs of economic worry.
“I don’t have a crystal ball,” he said, and then claimed there’s a 10% chance we’d see an economic crisis in “months.”
“This is not a small thing… it’s not like the banking crisis is over,” Srinivasan said, referring to the SVB collapse. That bank was one of the largest bank failures in U.S. history, though that hasn’t stopped his former bosses at Andreessen Horowitz, also known as a16z, signing back on to the restored bank. Don’t forget that part of the reason for SVB’s immediate collapse was a bank run of startup founders and venture firms, many backed by a16z. The venture capital firm had reportedly messaged many of its startups telling them to get their funds out, decimating the bank in a number of hours.
Let’s also not forget where the price of bitcoin currently stands. The price of bitcoin saw highs of above $60,000 briefly in late 2021 before crashing precipitously over the course of the following year. According to Coinmarketcap, the price currently sits below $30,000. If he truly thought the price of bitcoin would bounce $70,000 in price in just a few-months time frame, he would also have to confront the fact that bitcoin is only rarely used as a currency, and acts more as a volatile speculation that rarely leads to any sort of profit for base users.