Srinivasan, a well-known Bitcoin enthusiast and entrepreneur, is betting that the United States will experience hyperinflation, leading to a deflation of the U.S. dollar and a surge in the value of Bitcoin. Medlock, on the other hand, is bearish about hyperinflation in the country. The bet has been set up as a smart contract, and if Srinivasan loses, he will pay $1 million worth of the dollar-pegged stablecoin USD Coin (USDC) and one BTC to Medlock. If Bitcoin’s price reaches $1 million by the deadline, Srinivasan will keep the 1 BTC and the $1 million in USDC.
Srinivasan has also disclosed that he will move another $1 million in USDC for another wager on the same topic, with Medlock and one other person. The bet comes at a time when Bitcoin’s price has already reached $27,387, with its market capitalization adding over $194 billion year-to-date to a 66% growth in 2023. It has also outperformed Wall Street bank stocks amid fears of a global banking crisis.
Srinivasan’s bet is based on his belief that the U.S. economy is facing an impending crisis that will lead to the deflation of the U.S. dollar, which will result in a hyperinflation scenario that will drive Bitcoin’s price up to $1 million. This view is shared by many other Bitcoin proponents, who argue that Bitcoin’s finite supply and decentralization make it a safe-haven asset in times of economic uncertainty.
However, the mainstream financial industry and economists have largely dismissed these claims, arguing that Bitcoin’s price is driven mainly by speculative trading and that it has no intrinsic value. Despite these criticisms, Bitcoin’s popularity and adoption continue to grow, with major companies and institutions like Tesla, MicroStrategy, and PayPal investing in the cryptocurrency.
In conclusion, Balaji Srinivasan’s $1 million bet on Bitcoin’s price reaching $1 million in 90 days is a bold move that reflects the growing optimism among Bitcoin proponents about the cryptocurrency’s future. While it remains to be seen whether Srinivasan will win the bet, the ongoing debate over Bitcoin’s value and role in the global economy is likely to continue for some time.
Bitcoin (BTC) and cryptocurrency holders are enjoying the fruits of their labor on Feb. 10 after Bitcoin price rallied shortly after the U.S. Bureau of Labor Statistics showed a blistering 7.5% Consumer Price Index (CPI) print. This shows that inflation continues to worsen as fiat currencies bleed out their purchasing power.
Data from Cointelegraph Markets Pro and TradingView shows that after trading below $44,000 during the early hours on Thursday, the price of Bitcoin spiked to an intraday high at $45,850 following the release of the CPI data and most major stock market indices plunged into the red.
BTC/USDT 1-day chart. Source: TradingView
Here’s a look at what several analysts are saying about how Thursday’s CPI print could affect the price action for BTC moving forward and what levels to keep an eye on as the world grapples with high inflation.
Bitcoin enters a new cycle
“We are in a new cycle now” according to Ran Neuner, host of CNBC’s Crypto Trader, who posted the following chart highlighting the February BTC breakout as part of a cyclical pattern that Bitcoin has been trading in over the past year.
BTC/USD 1-day chart. Source: Twitter
As shown in the chart above, this is the second time in less than a year that BTC has reversed course to head higher following a steep downtrend.
Neuner said,
“This CPI pump is confirmation that CPI/Interest rate hikes are part of the old cycle. Ever since we broke the trend line, the news is different, the narrative is different. It’s not a coincidence. Be a cyclist.”
Analysts say the multi-month correction is over
Further insight into this trend reversal following a 3-month correction was provided by technical analyst and pseudonymous Twitter user ‘CryptoBirb’, who posted the following chart detailing the range-bound trading for BTC over the past year stating “with a bit of luck, Bitcoin may see follow-through to the upside, even beyond $50,000.”
BTC/USD 1-week chart. Source: Twitter
Should BTC manage to hold its momentum at these levels, “Bitcoin has near targets of $46,300 – $46,500.”
CryptoBirb said,
“The most important line in the sand is defined at $51,000 by the price action of Bitcoin. That level could be expected to work as a magnet for BTCUSD if we are to see follow-through to the upside.”
Related:Bitcoin rejects sell-off as 7.5% US inflation fails to keep BTC down for long
BTC price decouples from equities
The bullish performance seen across the cryptocurrency markets in February was addressed in comments by Dalvir Mandara, a quantitative researcher at Macro Hive, who noted that the “impressive gains” have come “on the back of markets digesting increased Fed hawkishness and pricing in more hikes, as well as the ECB pivoting to potential hikes in 2022.”
According to Mandara, the fact that the crypto market has been able to rally higher despite tighter than expected liquidity conditions “suggests macro factor may be affecting them less than before.”
Mandara pointed to Bitcoin’s correlation to tech stocks, which has now “fallen from the highs of 75% last week to 50% this week” as evidence for this shift in impact on the BTC price.
Rolling 30-day correlation between BTC and NASDAQ. Source: Macro Hive
Mandara said,
“Overall, we still think the macro backdrop is negative for crypto but on-chain/flow metrics have turned more positive so we are moderately bullish on balance.”
The overall cryptocurrency market cap now stands at $1.996 trillion and Bitcoin’s dominance rate is 41.9%.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Two currency crises two thousand years apart. Modern-day Venezuela and the Roman Empire have more in common than you might think. Both know too well the dangers of soaring inflation and a collapse in investor confidence. But, only one has crypto on its side.
Venezuela’s official currency, the bolívar, has suffered from hyperinflation for half a decade due to repeated currency devaluations, minimum wage rises and significant public spending increases.
For a sustained period of several centuries, the Roman Empire enjoyed the enormous trade and commercial benefits associated with the world’s first fiat currency, as explored in my book Pugnare: Economic success and failure. The Roman currency was comprised of three coins: gold (Aureus), silver (Denarius) and copper or brass coins (Sestertius and Dupondius). Crucially, and despite fluctuations in the value of the underlying metal, the exchange rate between them was fixed by imperial decree.
This seemingly simple financial innovation brought with it untold wealth and commercial opportunity to the citizens of the Roman Empire, leading to the transition of Ancient Rome from an empire dependent largely on the spoils of war and imperial conquest to one founded on trade, commerce and free enterprise.
Just as with modern currencies, it was underpinned by a sophisticated banking system, which allowed goods to be bought and sold without the physical transfer of tonnes of precious metal. Most of their money was also like ours: created by banks out of thin air when they made loans. Just like modern economies, the majority of Rome’s money supply was held in bank deposits rather than cash in circulation. Though modern-day electronic transactions are faster, whether you use a graphics card or a horse and cart, the process is much the same.
Much like modern-day Venezuela, irresponsible public spending and currency debasement in the empire led to soaring inflation, a collapse in investor confidence and an abandonment of the consumer trust that underpinned the exchange rate innovation. But, if the Romans, paralleling the citizens of Venezuela today, traded in their Aureus for Ether (ETH) or if the government had set up a “digital denarius,” could the empire have survived?
Related:Gold, Bitcoin or DeFi: How can investors hedge against inflation?
Centuries apart, Rome and Caracas face the same menace: Hyperinflation
From the time of Emperor Philip the Arab (244 AD to 249 AD), the system of fixed exchange broke down. Every day, commercial activity became more difficult because of the variable rate of exchange. The equivalent effect would be if ten one-dollar bills were worth a ten-dollar bill one day then a five-dollar bill the next. Citizens no longer knew the value of their money. Economic activity declined.
This was a dramatic fall from grace for the world’s first government-controlled currency, which had been in use to pay for goods from Britannia to Judaea to Africa Proconsularis.
Unlike their Roman forebears, digital currencies have offered the citizens of Venezuela an innovative solution. They can circumvent the bolívar by adopting cryptocurrencies such as Bitcoin (BTC), Ether, Dash (DASH) and EOS (EOS), to the extent that the government introduced its own, the petro, in 2018. Iran is hoping to use the profits from a booming cryptocurrency mining sector to bolster its economy while still under siege from United States sanctions.
Related:US sanctions strategy and crypto: The cracks are showing in Iran
Turning to cryptocurrency was, despite the many technological and societal advancements they made, not an option available to the Romans. Instead, the Roman currency collapse led to a decline in economic activity, delivering economic destitution to once prosperous regions and triggering the start of a long and slow economic decline from which it would never truly recover.
Romans could have made a mint from crypto
Cryptocurrency would also have relieved the Romans of having to maintain a mint as well. It eventually became more and more difficult for the Romans to source the gold and silver to make new coins, so the government cheated by increasing the amount of base metal. This led to inflation which eventually made people lose trust in the money they held.
The breakdown in trust was worsened by a civil war in 193 AD that led to key currency reforms which had centralized control of the currency being abandoned. Once that control was lost, manufacturing and trade went into decline.
Like Venezuela, soaring inflation, a loss of confidence in government and civil unrest led to a collapse in the banking system and, finally, full-scale economic collapse. But, unlike the Romans, the decline of centralized currency offers a possible route out of economic decline for Venezuela, not the slow nail in the coffin it was for the empire.
Cryptocurrency is used by Venezuelans for everything from hotel bookings to pizza deliveries. While President Maduro’s government released the Petro, crypto has also been used against them. Maduro’s rival, National Assembly President Juan Guaidó, has used the stablecoin USD Coin (USDC) to circumvent Venezuela’s banks and send humanitarian aid to healthcare workers.
Power over the empire’s monetary supply was often contested between rival factions. For example, during the civil war of 193 AD, a new mint was opened in what is now Turkey and used by rival claimants to the imperial throne, Niger and Septimius Severus. In contrast, Emperor Vespasian was able to maintain a period of peace and stability between AD 69 and 79, partly because he recognized that he must control the money supply, especially the mints.
Roman cryptocurrencies could have survived to modern times
Governments in Venezuela, Iran and elsewhere today looking at adopting cryptocurrencies as official currencies should pay attention to the Roman example. It shows how badly things can go wrong if the money supply is controlled by different even rival organizations.
Perhaps if the Romans had not been reliant on physical currency but had instead had access to crypto, maybe it would not have been destabilized by economic collapse and in-fighting.
If so, maybe today the people of Venezuela would not be using Bitcoin or Ether, but instead a digital currency inherited from the time of Nero and Vespasian.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
George Maher is an academic and author. His latest book Pugnare: Economic Success and Failure, explores the rise and fall of the Roman empire from an economic perspective. It has been listed in both the Financial Times and Money Week. George holds a PhD in the economy of the Roman Empire from King’s College London and both a first-class honors BA and MA with distinction in Classics from Birkbeck University of London. He is a fellow of the Institute and faculty of Actuaries and holds a first-class honors degree in Special Honours Mathematics from Trinity College Dublin.
Turkey’s President Recep Tayyip Erdoğan has reportedly confirmed the completion of a crypto law draft that will soon be shared with the Parliament for mainstream implementation in the country.
In an effort to counter the falling value of the Turkish lira, President Erdoğan shared plans to implement a new economic model while speaking at a press conference in Istanbul. As reported by local media NTV, Erdoğan said that the cryptocurrency bill is ready, adding:
“We will take steps on this issue by sending it to Parliament without delay.”
Acknowledging the country’s recent inflationary episode, Erdoğan said that the currency event is not related to mathematics but a matter of process — implying a possibility and potential of lira’s value growth:
“With this understanding, we intend to channel it to a dry spot. But the exchange rate will find its own price on the market.”
With the introduction of the new crypto law, the president envisions Turkey to become one of the 10 largest economies in the world. Speaking about the rising prices in the region, he shared plans to follow the people who change the labels of the price list organizers several times a day. “We want them to lower the dollar’s increases now,” he concluded.
Related:Bitcoin hits new all-time high in Turkey as fiat currency lira goes into freefall
On Nov. 23, Bitcoin holders in Turkey avoided an accelerating currency collapse as the lira lost 15% against the U.S. dollar in a single day.
As Cointelegraph reported, the fiat currency’s fall resulted in Bitcoin (BTC) reaching a new all-time high against the Turkish lira. The BTC/TRY trading pair reached 723,329 Turkish lira on Binance.
Veteran hedge fund manager and American investor Ray Dalio is warning about the implications of climbing prices in consumer goods.
In a new interview on Yahoo Finance, Dalio explains why he is significantly concerned about high inflation.
“I’m significantly concerned about it because the amount of money and credit that has to be produced and is budgeted is a large increase and yet if it is not spent, it produces its own problems.
The markets have a sensitivity to that.”
Dalio’s comment comes after the Labor Department’s Consumer Price Index rose by 6.8% in November, the fastest in 39 years. In a LinkedIn post, he says that high inflation can be particularly devastating for those whose money is in fiat.
“Some people make the mistake of thinking that they are getting richer because they are seeing their assets go up in price without seeing how their buying power is being eroded.
The ones most hurt are those who have their money in cash.”
The billionaire, who once told investors to stay away from Bitcoin (BTC) before changing his stance on the flagship cryptocurrency, warns about the US printing too much money without raising its productivity levels.
“Now, when we look from an investor’s point of view or an individual’s point of view, we have to remember that you can’t raise living standards by just creating money and credit, particularly if you don’t raise productivity more than that.
Over the long run, the wealth and buying power you have will be a function of how much you produce. That is because real wealth doesn’t last long and neither do inheritances.
That is why being continuously productive is so important.”
Based on his research on why nations succeed or fail, Dalio says that countries that print too much money typically do not fare well.
“When there’s a financial problem… and the coffers are empty, they print money. And when they print money… it devalues money.
With that, when you have a large gap of people at each other’s throats, then you create a risk of an internal conflict, the risk of some kind of civil war.”
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Last month, Cointelegraph interviewed Reserve CEO Nevin Freeman and the payment decentralized application’s community manager Yens Michiels about the company’s mission to provide access to stable currencies. More recently, Cointelegraph spoke to a couple of users based out of Venezuela and Colombia who shared their positive experiences with Reserve.
Reserve is a tool to exchange fiat currency like Venezuelan bolivares for U.S. dollars via the Reserve (RSV) stablecoin. From everyday purchases to family remittances, Reserve has said that its use cases are increasingly growing in Latin America. After one year on the market in Venezuela, Colombia, Panama and Argentina, there are over 100,000 weekly app visitors and more than 8,000 merchants accepting it as a means of payment.
Sasha Antunez and Alicia Stephany are two Reserve customers who offered their perspective on the app’s role in their daily lives and on the economic situation in Venezuela. Antunez is a neurologist living in Maracay, Venezuela and a self-proclaimed “Reserve Ranger” who uses Reserve both at home and at work. Stephany is a Venezuelan living in Bogota, Colombia who uses Reserve to support her family members that still live in Venezuela.
Antunez explained how she uses Reserve for daily expenses:
“I have my Reserve dollars saved in the app. Suppose I have to go to the supermarket and I have around $20. I do the exchange so that I have bolivares in my bank account and can pay for everything at the supermarket. But I also know that I can take my bolivares, turn them into Reserve dollars, and then into USDT.”
Most customers use it to save their money. If they get paid in their local currency, they do not have to worry about its devaluation if it is in U.S. dollars. And if they need to buy something in a local currency, as Antunez described, they can always convert it back or pay directly with the RSV stablecoin if the merchant accepts it. Most don’t even realize that it has to do with cryptocurrency, like Stephany.
“The Venezuelan bolivar loses value so fast that if you have bolivares, you need to change it as soon as you can to protect them,” she explained, adding the example that if she’s in Colombia and her father is in Venezuela, but “I needed to pay for his things, then instead of only exchanging what I needed at the supermarket, I was always looking for someone to buy extra dollars from me. So, I convinced the people from the supermarket and the pharmacy I use to download Reserve.”
Related:Venezuelan international airport to accept Bitcoin payments: Report
The government introduced a re-denomination of the currency in October, the third one since 2008, in order to ease computations. The economy, however, had already been increasingly unofficially dollarized. This means that prices in stores are marked in dollars, corresponding to the black market rate rather than the official exchange rate, as more and more merchants use PayPal, Zelle or, now, Reserve. With Reserve, users can exchange currencies at rates closer to those of the central bank.
Couple this volatility with hyperinflation, and mistrust in the government and the banking system is bound to surge among citizens. When asked about the prospects of the economy getting better in Venezuela, Antunez said:
“I believe that technology will play a big part because cryptocurrencies allow financial freedom and free access for everyone. That’s how we need to address this situation, by giving people the tools to protect their money. Here, we don’t have any solutions, at least not right now. And I don’t see things getting any better. In the meantime, we’re just trying to protect the little money we earn from our jobs.”
At the time of publication, the project’s iPhone app was the No. 1 most downloaded app in the Venezuelan app store under the finance category. Binance and MetaMask, two other cryptocurrency trading apps, are among the top 10 as well.
