The Million Dollar Bitcoin
Banking Collapse Causing Hyperinflation
It’s been a wild couple of weeks since my last newsletter. It’s hard to keep up with it all, but what it looks like to me, is Great Financial Crisis (2008) 2.0. Banks are failing and subsequently they are being bailed out by the Federal Reserve through … you guessed it, Money Printing. They may call it Quantitative Easing, or a Bank Term Funding Program, or Backstopping the Banks. Don’t let those terms confuse you, its all the same thing. The money printer is on, and it’s going brrrrrrrrrr.
Bitcoin Goes Up
My intention with this letter is to simply put things in perspective for you. I won’t be making any predictions as to how things will unfold other than, bitcoin will go up. No one says this better than Dylan LeClair.
The Size of the Bailout
While estimates vary, sources will largely agree that the size of the bailout in 2008 was to the tune of $500 - $700 billion. The current size of the bailouts taking place right now is $300 billion and counting. The bailouts include FDIC safety nets for Silicon Valley Bank and Signature bank. The US government and Federal Reserve are using this nuance as an example of how the US taxpayer is not actually paying for their bailouts.
This is simply a slight of hand, FDIC itself is backstopped by the Fed and when money printing happens, it takes place on the backs of taxpayers. Make no mistake, US Taxpayers are paying for these bailouts, they always have and always will.
A loss in Confidence
While these bailouts may stave off total collapse of the financial system, what it is simultaneously doing is destroying confidence in the US dollar itself. As more US Dollars get created to save failing banks and as smaller banks fail and are unable to make good on customer deposits, a general lack of trust and confidence in the USD itself is leaking into the public and global zeitgeist.
Trust and Power in the Absence of Gold
In the absence of a hard asset like gold backing our national currencies, central banks peddle in trust and power. With trust waning, their last resort to back their respective currencies will be power. What is expected to happen, is market participants will look for an asset that doesn’t require trust to maintain the value (Bitcoin is “trustless”). This is where the $1M Bitcoin bet comes in.
The Million Dollar Bitcoin Bet
In light of recent events, ex Coinbase CTO, Balaji Srinivasan went on Robert Breedlove’s “What is Money” show to discuss his thesis on why Bitcoin will reach $1 million per coin within 90 days of March 15th.
I highly recommend listening to the episode, as Balaji lays out his thesis and sources for reaching this striking conclusion. I personally do not think that his thesis will play out in the next 90 days, as I don’t quite think we’re in the “suddenly” phase of the “gradually then suddenly” adoption curve. However, I do consider it to be an inevitability that Bitcoin one day reaches $1M per coin.
Still, his bet has fired up a lot of bitcoiners on Twitter and social media. The first step in getting Bitcoin to go on a massive bull run, is to create the narrative that it is going to do so.
For reference, this is what Bitcoin hitting $1M within 90 days would look like on a logarithmic chart.
From this perspective, it actually doesn’t look that crazy, but I still mark this prediction as highly improbable. Essentially, his bet depends on large market participants more-or-less simultaneously coming to the understanding that bitcoin is the only asset in the world (in existence) without some sort of counter party risk.
As banks continue to fail and the bank-run contagion spreads, market actors will seek for the exact opposite kind of asset from the one that they’re holding that exposed them to the risk in the first place. The asset that is diametrically opposed to an infinitely expanding currency (USD) is the currency that is absolutely, totally, and reliably scarce (BTC).
As always, leave your comments to let me know your thoughts on my articles.
Share this newsletter with friends or family to spread awareness on what is happening in our economies. Now more than ever, it is important to understand that the value of our fiat currencies is deterioriating before our eyes. This pace trend will continue to happen faster and faster as time goes on and as trust in our legacy financial system wanes.