Balaji Srinivasan became an overnight sensation because of his insane bet that a single bitcoin (BTC) would be worth $1 million in 90 days. However, recent events are showing that he might not be making an insane prediction at all.
To bring the uninitiated up to speed, Balaji, former Coinbase CTO and ex-partner at Andreessen Horowitz, made a wager with James Medlock of $1 million and another million with an anonymous person.
People have then called out Balaji, including BTC bulls, saying that his $2 million wager is a guaranteed loss. However, events are recently unfolding according to his prediction.
Banking Contagion From the US Becomes a Pandemic
Recently, the banking crisis has moved overseas, as Credit Suisse — the second-largest bank in Switzerland — has succumbed to the contagion. Now, it is being bailed out by UBS, the number one investment bank in the country, with backing of the Swiss National Bank.
Now, instead of market fears being quelled by this takeover, shares of both UBS and Credit Suisse plunged. In addition, shares of European banks are seeing a similar downtrend.
These banking fears are turning into a pandemic, as central banks of American allies such as the Swiss National Bank, Bank of Japan, European Central Bank, Bank of England, and Bank of Canada have joined hands to keep the US dollar liquid.
This is a coordinated attempt to maintain the liquidity of the dollar, so as to prevent more terrifying scenarios for the global banking sector.
BBC wrote in an article:
“The announcement of “co-ordinated action” by six of the world’s biggest central banks shows how serious the more general nervousness [is] about the fragility of the global banking system.”
A Lesson From 1930s Germany
Global financial superpowers have a legitimate cause to step up, as history suggests that these banking failures will lead to direr scenarios.
Brad Mills, a BTC investor, wrote a Twitter thread that showed symptoms of a greater threat to the global economy. He sourced the history lesson from a book titled When Money Dies: The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany.
The book, written by Adam Fergusson, discussed the factors that led to hyperinflation in Germany that sparked the rise of Adolf Hitler into power. According to the book, high inflation was one of the reasons.
During US President Joe Biden’s tenure alone, the Federal Reserve has added almost $2 trillion to its balance sheet, and this was back in April 2022, as per USA Today. But that is not all. In Q3 last year, the administration approved $4.8 trillion of borrowing until 2031. This will have dire consequences.
Mills also mentioned other similar factors such as people betting their money on speculative practices and assets like speculative stocks, NFTs, sh*tcoins, and more. Remember the infamous Inverse Jim Cramer ETF, as well as the hundreds of JPEG NFT collections on OpenSea?
There was also a great divide between the rich and the poor in early 20th-century Germany.
Finally, Mills mentioned weakening labor participation among young adults and deviation from normal career options.
All of these, according to the Twitter thread, are evident in the US today.
Balaji’s Battlecry
Balaji’s reasoning may indeed be sound in the context that the hyperinflation of the US dollar is looming around the corner.
At the time of writing, BTC price is trading at $28,364.11, an impressive 7-day surge of 28.5%. Last month, this would have been unthinkable.
Should the US economy suffer a fatal blow, the rest of the world will succumb as well. Unfortunately, only economies that attempt to steer clear of the dollar will have a better chance. So far, China, Russia, North Korea, and El Salvador are some of the countries that are relatively successful in this regard.
However, his $1 million bitcoin bet is far-fetched at the moment, and there’s a reasonable possibility that it might not happen. That is not entirely his point, however.
In a nutshell, Balaji’s bet is a digital battlecry — an upheaval of some sort — against the failing global economy. He is making a statement, and he is literally putting his money where his mouth is, by saying that the dollar is bound to crash to the point of no return if it continues on its grotesque trajectory.
And if it happens, only Bitcoin will stand. That is what Balaji’s message is.
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