Former a16z partner and Coinbase CTO Balaji Srinivasan has been criticized for over-predicting bitcoin prices. Among them, renowned academic and risk analyst Nassim Nicholas Taleb criticize Srinivasan’s bet was a “crazy” move.
Balaji Srinivasan – Former a16z Partner and Coinbase CTO
Srinivasan announced on Twitter that he would bet $1 million that Bitcoin would hit $1 million within 90 days, sparking heated debate and backlash in the crypto community.
Taleb expressed his skepticism, calling Srinivasan’s deal a “deal against himself” and that only “crazy people get out of hand.”
Taleb, the best-selling author of Black Swan, Proclus’ Bed, Antifragile and many others, is known for his expertise in risk and probability analysis, which makes his criticism particularly harsh. .
He also stressed that Srinivasan’s bets could be used for arbitrage, inviting his followers to determine the best strategy.
Other prominent figures have joined the fray, such as Roy Blackstone, director of special projects at the Massachusetts Institute of Technology, trader and investor. He compared Srinivasan’s prediction to John McAfee’s infamous bet that he would eat his own penis if bitcoin didn’t hit $1 million by 2020.
Blackstone sees Srinivasan’s forecast as a ruse to help his friend take a long position.
Financial reporter Matt Levine also questioned the logic of the odd forecast. He pointed out that if Srinivasan really believed that the top cryptocurrency would be worth $1 million in 90 days, he should have bought 40 bitcoins instead of 1.
Levine further pointed out that his many replies to his tweet suggested that Srinivasan was trying to manipulate the market by trading futures far above current prices.
At the same time, analyst Wang Qiao gave a more quantitative response, saying that a world where Bitcoin reaches $1 million in 3 months may be accompanied by war, nuclear weapons, artificial intelligence (AGI) escape, or the arrival of hostile alien forces and other catastrophic events.
Wang said that while bitcoin could realistically reach $1 million in 10 to 20 years, the short time frame proposed by Srinivasan is unlikely to materialize even if the odds turn in his favor.
Prominent analyst rejects Srinivasan’s forecast
Well-known analyst Adam Cochran recently voiced his disapproval of Balaji Srinivasan’s bold prediction that Bitcoin will reach a staggering $1 million within the next 90 days. Cochrane’s skepticism is based on historical data and the performance of alternative assets in times of crisis.
Cochrane highlighted that from 2020 to 2022, Bitcoin has gained 547%, while the rally in 2017 at a much lower price has brought about a gain of only 1,105%. Given these numbers, Srinivasan’s prediction of a massive jump to $1 million in such a short period of time seems far-fetched.
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The bet here is that within 90 days, the price of Bitcoin will reach $1 million.
Or about 3600% over the next 90 days.
To put that in perspective, the 2020-2022 increase is only 547%, compared to the much lower price increase of 1,105% in 2017. pic.twitter.com/7OZZHXNgYX
— Adam Cochran (adamscochran.eth) (@adamscochran) March 18, 2023
Cochran also noted that alternative assets such as cryptocurrencies and precious metals tend to perform better when exposed to economic rather than systemic risk. Alternative assets may be a viable option when the economy is struggling or cash flow is constrained. However, when the entire system is in danger of collapsing, the value of these assets becomes irrelevant.
The analyst cited the February 20, 2020 stock market crash as an example, when the world was grappling with the outbreak of the pandemic. During this period, the price of Bitcoin has plummeted by more than 60% from its peak. While many believe that Bitcoin is now more widely accepted as an alternative to gold, Cochran’s testimonials of gold’s performance during the pandemic crash aren’t particularly impressive.
Gold, often viewed as a safe-haven asset in times of economic uncertainty, has only gained 8.3% in value during the pandemic. Comparing Bitcoin’s reduced volatility (-70%) over the same period to gold’s increased volatility (+8.3%), Cochran concludes that, based on Srinivasan’s reasoning, Bitcoin’s expectation of $1 million in 90 days is Unrealistic.
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