Expert questions the odds of former Coinbase CTO’s bet that Bitcoin will reach $1m

Former Goldman Sachs executive and macro investor Raoul Pal said there is effectively zero probability that Balaji Srinivasan will win the bet in which the ex-CTO Coinbase bet on Bitcoin reaching $1m within the next 90 days.

Srinivasan proposed the bet to economist James Medlock, who doubted the US economy’s transition into hyperinflation.

Under the terms, if Bitcoin does not reach $1m by June 17, Medlock will win $1m and receive his collateral of 1 BTC. Similarly, if by that deadline or earlier the premier cryptocurrency reaches the stated threshold, Srinivasan will win 1 BTC and return $1m.

In effect, the former Coinbase CTO is betting on a scenario in which the world returns to a gold standard, with the role of the precious metal ceded to Bitcoin. The catalyst could be Bitcoin purchases by US states such as Texas or Florida, as well as by individual countries, for example Saudi Arabia, Singapore, and the UAE, he explained.

“Everything will happen very quickly once people verify what I say and see that Fed lied about how much money is in the banks. All dollar holders will be wiped out”, — the expert warned.

The dispute between Medlock and Srinivasan unfolded against the backdrop of the collapse of American banking institutions and, subsequently the Swiss investment bank Credit Suisse.

The turbulence in the sector led to the launch of dollar swap lines with the participation of leading central banks worldwide. Separately, the Fed also organized the Bank Term Funding Program (BTFP) for $25 billion.

Paradigm co-founder Matt Huang saw in the Fed’s actions the de facto launch of quantitative easing. The latter is characterised by an inundation of liquidity into capital markets, which typically fuels asset prices and inflation.

“quantitative easing”

“yield curve control”

“bank term funding program”

“coordinated central bank action to enhance liquidity”

the english language has so many synonyms for BRRR https://t.co/rqVl70DQeh

— Matt Huang (@matthuang) March 19, 2023

In the interview, Pal agreed with Srinivasan’s reasoning, but deemed the bet unlikely to succeed.

The expert noted Bitcoin’s 40% rise since the onset of the current banking crisis. The macro investor linked the momentum to growing awareness of the fragility of the financial system, pushing investors toward parallel alternatives such as cryptocurrencies.

Pal noted a direct correlation between the Fed’s balance sheet and Bitcoin—the latter rises during quantitative easing and falls under quantitative tightening. The former Goldman Sachs executive forecast the “shock power” of digital gold in the near term, but indicated $50 000 as a cap on growth over the next 12 months.

“He has zero point zero per cent odds of being right, but … he is spending a million dollars, two million dollars on promoting an important concept”, — the macro-investor concluded.

As noted in March, CryptoQuant founder Ki Young Ju and analyst rektcapital noted the Bitcoin’s transition into a bull phase.

Earlier, Messari founder and CEO Ryan Selkis predicted Bitcoin would rise to $100,000 within 12 months.