Saifedean Ammous, author of the international bestseller "The Bitcoin Standard" published in nearly 40 languages, has taken to Twitter to share his take on the recently made bet that the world's leading digital currency would hit $1 million within the next three months.
Former a16z partner and Coinbase CTO Balaji Srinivasan recently bet a whopping $2 million that Bitcoin would soar as high as $1 million over the next 90 days.
Ammous stated that he feels "dirty" making a bearish forecast on Bitcoin in this particular case, but he does not believe that the aforementioned prediction will come true. This is mainly because he does not think that the U.S. dollar can hyperinflate within such a short period of time as three months.
I feel dirty sounding bearish on bitcoin, but I do not think bitcoin will hit $1m in 90 days & and I do not think the dollar can possibly hyperinflate this quickly.— Saifedean Ammous (@saifedean) March 22, 2023
My reasoning follows https://t.co/y5g9CK2qxA
Banking crisis would not help BTC, and other reasons
Saifedean Ammous discussed each reason suggested by Srinivasan for the BTC price jump, refuting it with an explanation.
First of all, he commented on the "banking crisis" argument leveraged by Srinivasan. The latter stated that one of the reasons why he reckons BTC would soar that high would be the fact that banks have been going bankrupt fast. Three major banks have become insolvent recently and were bailed out by the U.S. government.
However, Ammous stated that any banking crisis, even if his opponent is right about the large scale of the current one, is deflationary, and when banks shut, the money supply declines. Even if it happened that all banks suddenly went bankrupt in the U.S., the largest portion of the money supply would be destroyed. That rules out any hyperinflation for the USD.
Even if central banks of countries aside from the U.S. started printing cash actively, this would still cause only inflation but not hyperinflation, Ammous explained.
Bailing out bank depositors would simply keep the money supply constant and not push it higher, Ammous noted. He added that "you'd need an impossibly large amount of printing to bring about hyperinflation in 3 months & history provides plenty of evidence in support of that."
In order for Bitcoin to get to the desired $1 million level, hyperinflation must be as strong as to devalue the USD by half per day. But that takes "many months and maybe even years," per the Bitcoin researcher.
Switching from USD to BTC is like "going from Windows to Linux"
According to one of the tweets in the thread, roughly $25 million in new demand for Bitcoin is necessary now to keep the price at the current level ($28,000), while around 900 BTC will be produced by miners on a daily basis before the halving in 2024.
To push the BTC price up to the $1 million mark, daily demand for Bitcoin must be around $900 million: "This is not impossible, it is highly unlikely," Saifedean Ammous concluded, and certainly such a rise in demand is hardly possible within merely 90 days.
"Even in the wildest bitcoin manias, we've seen nothing like this extent of increase in new demand happening in such a short period of time."
Besides, for the U.S. to switch from the USD to Bitcoin is not a fast or easy process, the author of the book stated. It is like "going from Windows to Linux."
6- Moving to bitcoin is more than just a matter of dumping dollars for bitcoin, like going from Windows to Linux. It's a far more complicated process because there is a steep learning curve for understanding bitcoin, how it works, how to store it, where to buy it, and why to…— Saifedean Ammous (@saifedean) March 22, 2023