Balaji, former Coinbase CTO, closes $1 million bet on Bitcoin ahead of time, here’s why

Balaji Srinivasan announced closing his $1 million bet on Bitcoin (BTC) prematurely and donated $1.5 million to three organizations as a settlement. Notably, this amount is $500,000 more than required.  

The reason I did this was because I do believe in the public good, but unfortunately, we can't rely on the public sector anymore to tell us when something's wrong.

Balaji bets $1 million that Bitcoin price will hit $1M within 90 days

Shortly after the failures of Silvergate Bank, Signature Bank, and Silicon Valley Bank (SVB) around mid-March, Balaji said he anticipated "a banking crisis to fuel a significant devaluation of the US dollar, hyperinflation, and a surge in BTC to $1 million by mid-June." He put up $1 million to back his prediction.

In a May 2 announcement, however, the ex-CTO at cryptocurrency exchange Coinbase, and former partner at Andreessen Horowitz venture capital firm, acknowledged on Twitter having spent his "own money to send a provably costly signal that there was something wrong with the economy. Further, he noted that it will not be a 'soft landing' as [Federal Reserve Chair Jerome] Powell promises – but something much worse."

Notably, the bet was closed on mutual agreement, with Balaji saying, “The reason I did this was that I do believe in the public good, but unfortunately we can't rely on the public sector anymore to tell us when something's wrong.”

Today's crop of leaders is in denial, Balaji

According to Balaji, the current crop of leaders, including Jerome Powell, is in denial, just like the 2008 cohort. The comparison comes as the tech entrepreneur acknowledged that the sitting US Treasury Secretary, Janet Yellen, was at the Federal Reserve before the 2008 global financial crisis. At the time, neither Yellen nor the then-Fed chair, Ben Bernanke, signaled any alarms.

In Balaji's opinion, crises move faster than expected, adding that it took two days for the Fed to print $300 billion after SVB imploded. It also took two weeks for $500 billion to exit the banking system. Similarly, it only took "two quarters to go from mild recession to financial crisis in 2008 and two years for the Soviet Union to go from superpower to collapse in 1991."

He also supported his crisis argument with a Covid-19 reference, saying it took two months to go from "patient zero" to national lockdown.  

Balaji settles with massive donations

Out of Balaji's $1 million bet, the tech billionaire made three $500,000 donations. The first was channeled towards pseudonymous Twitter user James Medlock, who had offered to bet $1 million back in March that the US would not experience hyperinflation.

Other donations were made to Give Directly and in support of Bitcoin Core development at Chaincode Labs.