Risk Analyst Nassim Nicholas Taleb has reacted to Balaji Srinivasan’s $1 million Bitcoin price prediction that emerged due to a bet. Like many others, he is making it clear that he is not confident in Srinivasan’s most recent move. Taking to Twitter, the Black Swan author claimed that after seeing Srinivasan’s trade, he wasn’t shocked at Srinivasan’s move. To Taleb, the bet that would see the Bitcoin proponent win $1 million seems to be more against him than he might know. Taleb maintains that the Bitcoin proponent is playing into his downfall.
“The sad part is that when I was shown balajis’ trade, I was not surprised. It’s called “trading against himself”, something lunatics do under the influence. Technical Quiz. Show it is arbitrageable: Sell him the forward & buy x btc to lock-in a profit. What is the optimal x?” Taleb wrote in a tweet. “The answer is only 1 if Btc has no volatility.” Taleb said in another tweet.
Additionally, the author pointed out that the move highlights a financial error, and that the Bitcoin proponent is making a mistake that many others have previously made.
“Most disturbing finance error: many like the lunatic Balaji mistake the forward for the expectation of future spot. It’s not and we’ve known since 1923 that Forward-Spot is simply a mechanistic cash and carry arbitrage relationship. You learn that in undergrad finance 101.” He explained in a follow up tweet.
Another key player bets against Balaji Srinivasan
Similarly, Adam Cochran, an investor at Cinneamhain Ventures, revealed that he was also betting against Srinivasan’s $1 million Bitcoin price prediction.
Going on to explain why, Cochran noted that the Bitcoin rally from 2020 to 2022 saw the apex cryptocurrency soar by 547%, and the 2017 Bitcoin rally at even lower price levels only recorded an 1105% gain. For Bitcoin to soar to $1 million, like Srinivasan predicts, the asset will need to secure an estimated 3600% in gains within the next 90 days.
Cochran asserted that some of the largest volatility spikes in Bitcoin didn’t send the asset soaring to the predicted levels, as such, an even bigger catalyst is needed for Bitcoin to attain such levels.
According to Adam Cochran, the other catalyst, which he noted to be the downfall of the U.S. banking system, is also flawed. It is expected that customers would exit the global currency, the hyperinflation of the USD and its debasement, and that would trigger a pump to $1 million for Bitcoin.
However, the problem, according to the investor, is that “Alternative wealth assets are great when you expect an economic risk, not a system risk. When economics are bad or cash strained, alternatives are good. When the system doesn’t exist – it doesn’t matter anyway.”