Balaji bets $1M that USD will suffer hyperinflation within 90 days

https://twitter.com/balajis/status/1636797265317867520

by JVillella • 3 years ago

24 17 3 years ago

How many bitcoins can I bet? Balaji is offering to sell a put on BTC with a $1M strike price (which is ITM by $974k) and the underlying is at ~$26k, 90 days to expiration. All you have to do to buy the put is put up 1 BTC ($26k) to potentially win $974k.

I don’t think he thought this all the way through.

JVillella7• 3 years ago

I think he is saying if it hyper inflates (they need to agree upon exact criteria) then he gets his 1M back + 1BTC. I don't think he is saying 1BTC > 1M USD.

quickthrowman3• 3 years ago

Obviously he’d get his $1M back, why wouldn’t he? I never said he wouldn’t…

He is selling a BTC put that expires in 90 days and is worth $800-900k for $26k, that’s all I said.

Balaji is betting the hyperinflation makes the BTC worth more than $1M hyper inflated US dollars. If hyperinflation happens, the BTC/USD pair will go up in dollar value.

sharemywin• 3 years ago

wonder if there's a way to pool funds like some kind of ethereum contract. I know ethereum won't talk to bitcoin, but maybe there's a way to do it?

JVillella7• 3 years ago

There's something called WBTC[1]. It's very popular.

[1] https://wbtc.network

gus_massa• 3 years ago

Hyperinflation is usually defined as an increase of 50% monthly (i.e. from 100% to 150%).

x40 in 90 days is in increase of 240% monthly (i.e. from 100% to 340%).

So it's a lot of inflation. This is not unheard, but it's very high and usually happens in countries with bigger problems. https://en.wikipedia.org/wiki/Hyperinflation#Notable_hyperin...

[Hi from Argentina, our peak was in July 1989 with 196% (i.e. from 100% to 296%), but the peak was short, we didn't have three months with 200% of mensual inflation. See the graph in https://es.wikipedia.org/wiki/Hiperinflaci%C3%B3n_argentina_...]

mark242• 3 years ago

Just how out of touch is this guy? 50% inflation MoM within the next 90 days? Does he not understand the multiple system shocks that would need to take place for that to even come close to reality?

Balaji, please - get out of your bubble. Go talk to your neighbors. They're all concerned about where to go for their kids spring break, the next episode of Mandalorian, and whether or not their bracket is still in contention.

Let's game out what it would take for 50% inflation MoM -- you'd need severe supply issues up and down for every possible good, including goods created domestically. You'd need the Fed to fire up the printing presses in a way that surpasses even 2008, which, good luck on that one. You'd need interest rates to go negative. You'd need the real estate market to do a 180 from "nothing's really selling right now" to "people can't buy houses fast enough". You'd need a confluence of black swan events to happen globally in order to knock the dollar from being a reserve currency. How does that possibly happen?

Just dumb, all around.

KRAKRISMOTT• 3 years ago

He will either lose his money or be known as the next George Soros (those who are old enough may remember that he once broke the British pound and several other minor currencies)

quickthrowman3• 3 years ago

I’m convinced he is trolling, he posted another tweet where he says this:

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.

How are people going to withdraw money and not put it into another bank? This guy is just saying ridiculous shit for attention, there’s no way he’s this stupid.

Again, his thesis is that bank withdrawals will cause banks to collapse and hyperinflation. It’s not possible for this to happen, there’s not enough physical cash to cause banks to collapse from withdrawals, and if you take money out of a bank in a non-cash form, where will you put it?

JVillella7• 3 years ago

How are people going to withdraw money and not put it into another bank? This guy is just saying ridiculous shit for attention, there’s no way he’s this stupid.

Maybe it goes something like this: AIUI the act of pulling money out of the banks will crash them, one by one. Along the way the government will continue to print to try to backstop it and restore confidence. The act of this just speeds up the demise. The money will get centralized to the GSIBs. But they have the same problem.

mrandish• 3 years ago

If we accept the hypothesis, based on available priors, that he's not an idiot – then what's he up to? Speculation: could he view making and losing the bet as worthwhile investment because he's holding enough bitcoin that media attention would increase concerns of hyperinflation driving bitcoin's value enough to offset the cost of losing the bet?

Balaji bets $1M that USD will suffer hyperinflation within 90 days

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