AMAC Exclusive – By Andrew Abbott
In a viral Twitter thread that garnered nearly 13 million views last month, entrepreneur, startup investor, and Silicon Valley guru Balaji Srinivasan made an audacious prediction: Bitcoin would rise from the then-current value of $20,000 to $1,000,000 within 90 days, and the world would experience a hyperinflation phenomenon never seen in the modern era. To back up his claims, Srinivasan bet a jaw-dropping $2 million on his prediction coming true.
Less than 30 days in, Bitcoin has indeed increased in value more than 50%, topping $30,000 for the first time in almost a year. As things currently stand, however, Srinivasan’s forecast that the volatile digital currency will reach $1,000,000 by mid-June and the world will see Weimar Republic-style hyperinflation still seems far-fetched. But the saga is the latest in a string of warnings from influential figures in the tech and banking world that a drastic shakeup in the global economy could be coming soon.
Critics of Srinivasan have alleged that the headline-grabbing prophesy from the famed tech leader is merely a ploy to boost his own financial interest in Bitcoin. Srinivasan has in the past indicated that he owns a large amount of Bitcoin, suggesting that even a modest gain in the crypto market could result in profits for Srinivasan that more than offset the loss of his $2 million bet.
Srinivasan himself has argued that he has little financial interest in the bet paying off, since if he is correct, it would only be because of a global economic meltdown that would wreak havoc on society. He has said that while he in fact hopes he is wrong in his prediction, the bet is an attempt to draw public attention to giant risks in the financial system so that people can get to what he calls the “lifeboat” of Bitcoin before it’s too late.
Many pundits have agreed that whether his prediction comes true or not in the timeframe of the bet, Srinivasan has highlighted very real trends that could lead to a paradigm shift in the global economy.
In the tweet outlining his reasoning for making the bet, Srinivasan argues that what he calls “hyper-Bitcoinization”—a flood of assets out of dollars into Bitcoin—will result from hyperinflation caused by a broader banking crisis. This crisis, he says, will be driven by the same factors which led to the collapse of Silicon Valley Bank and Signature Bank earlier this year.
“Just as in 2008, the bankers lied,” the tweet reads. “This isn’t your typical fractional reserve situation. The problem is that there isn’t enough in the banks on a mark-to-market basis to cover withdrawals. “They [bankers, the banks, and bank regulators] knew this through all of last year, and communicated it internally in their coded language.”
Srinivasan predicts that what happened at Silicon Valley Bank could soon happen on a global scale, almost overnight: “Hyperinflation happens fast. We’ve seen digital pandemics (COVID), digital riots (BLM), and digital bank runs (SVB). Everything will happen very fast once people check what I’m saying and see that the Federal Reserve has lied about how much money there is in the banks. All dollar holders get destroyed.”
Bitcoin, in his telling, will then become like “digital gold,” with investors and even nation states racing to store their wealth in the scarce asset (there is a hard limit of 21 million Bitcoin) rather than in a hyperinflating U.S. dollar.
“What’s going to happen is that individuals, then firms, then large funds will buy Bitcoin,” Srinivasan says. “Then sovereigns like El Salvador and tiny crypto friendly countries. The big move will be when a U.S. state like Florida or Texas, or a ‘normal’ country like Estonia, Singapore, Saudi, Hungary, or UAE buys Bitcoin. And when Modi tells India’s central bank to buy Bitcoin, even as a hedge, it’s over.”
Although many mainstream analysts have similarly blasted such predictions as alarmist and unrealistic, there are other concerning signs that the international market’s faith in the United States’ institutional leadership is beginning to flag.
During a recent World Economic Forum summit, for instance, Saudi Arabia’s Finance Minister, Mohammed Al-Jadaan, suggested that oil be traded in other currencies besides the U.S. dollar – a shift that would upend decades of precedent. Dozens of countries are also moving to de-couple their currency from the U.S. dollar, in part due to fear of the power of U.S. sanctions. In many cases, they are increasingly turning instead to the Chinese yuan.
Yet the yuan – as well as every other currency that is controlled by a national government – suffers from the same problem as the dollar in that its value can be manipulated at will. This is why Srinivasan and other pro-Bitcoin observers predict that as the United States continues to print trillions of dollars to fund far-left policy priorities, national banks around the world may well decide that Bitcoin is the surest way to preserve their wealth.
If this were to happen, it would likely result in a snowball effect just as Srinivasan describes, where the value of Bitcoin explodes rapidly as the value of the U.S. dollar collapses.
Only time will tell if such a scenario will come to pass. But with the White House and congressional Democrats continuing to pursue the same policies which created the possibility of such a scenario in the first place, its likelihood only seems set to increase.
Andrew Abbott is the pen name of a writer and public affairs consultant with over a decade of experience in DC at the intersection of politics and culture.