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The $2 Million Bitcoin Bet

March Madness was crazy this year. There were upsets, buzzer-beaters, and... bank failures.

Just this month:

• Silicon Valley Bank collapsed. The 2nd largest bank failure in U.S. history

• Signature Bank collapsed. The 3rd largest bank failure in U.S. history.

• Silvergate Bank collapsed. One of the largest crypto banks.

• UBS bought Credit Suisse for $3b. Credit Suisse was one of the 30 GIBS (Global Systematically Important Banks) we mentioned last week.

• First Republic and other community bank's stocks are down big. Just this month First Republic’s stock is down 85%. Earlier this week, JP Morgan provided $30b of liquidity to the bank to help out.

Now, it could get worse.

Balajis, the former CTO of Coinbase and partner at Andreessen Horowitz, just bet $2m worth of BTC that BTC will be worth $1m in 90 days, because the U.S. banking system will collapse.

Usually, when I hear a prediction like this, it’s from a friend who never finished community college and watches too many conspiracy theory videos.

But Balajis is the guy who predicted a small outbreak in China would shut down the global economy months before it did. He's the same guy who sold a genetics company for $375m and a crypto company to Coinbase.

So, when he says, “THE BANKS ARE INSOLVENT,” our ears perked up.

Not only does he believe banks are insolvent, but he believes the U.S. will experience hyperinflation (when prices increase by 50%) within 90 days.

Here's what Balajis is saying:

• The FED and FDIC are covering up trillions of dollars of unrealized losses on bank's balance sheets. He may have a point. Last week, US Banks borrowed over $150 billion from the Fed's discount window blowing past the previous record during the 2008 financial crisis ($112 billion).

• People will start pulling their moeny out of the banks when they realize it's not safe. Balajis believes the internet will add gas to the fire and speed up the bank run. Just like the Silicon Valley Bank crash, when depositors took out over $42b in one day. Faster and larger than any other bank run in U.S. history.

• The government will print money to back depositors and crush the value of the US Dollar. Right now, the Treasury Department is reviewing whether federal regulators have enough emergency authority to temporarily insure deposits greater than the current $250k limit.

• The government is trying to block the exits to crypto. Balajis said the government allowed Signature and Silvergate to fail because they banked crypto. Less than a month ago, US banking regulators released a statement warning banks that if they took crypto deposits they would be more vulnerable to a bank run.

How will the FED respond?

The Treasury Department and the FED continue to reassure the public the banking system is just fine. They may be right. Maybe everything is fine and this is a crazy overreaction.

However, if we’ve learned anything over the past year, don't trust what people say, trust what people do.

And, I'm not a banking expert, but it seems like The FED is having a "steady lads" moment.

• Janet Yellen came out and said the US will intervene to protect smaller banks if needed.

• The FED made an agreement with the Bank of Canada, Bank of England, Bank of Japan, European Central Bank and the Swiss National Bank to increase liquidity for USD swap lines.

• The U.S. reportedly pressured UBS into buying Credit Suisse because they couldn’t take any more pressure on the system

Plus, U.S. banks are facing more than $620b in unrealized losses and the Kansas City Fed says 333 community banks are currently at risk.

Before you go stockpile guns and toilet paper remember, the U.S. banking system is still the most sophisticated in the world and rate hikes usually take a while to affect inflation. The St. Louis Fed already thinks inflation is coming down and forecasted a 2.1% average inflation rate over the next 5 years.

Bitcoin bull, Anthony Pompliano (Pomp) said there is a 5% chance of hyperinflation actually happening. One of the biggest Bitcoin bulls on the planet just gave hyperinflation a 5% chance of happening.

There's a non-0% chance this happens, but I wouldn't say the odds are great. So now, the real question...

What should you do?

Balajis may be ringing alarm bells for a boogie monster that doesn't exist, but it doesn't mean he's completely wrong. The collapse of the American Empire in 90-days seems improbable, but it isn't crazy to say the U.S. Dollar is weakening and there is a lot of uncertainty in the market.

Besides taking all your cash out and hiding it under your mattress, what can you do to mitigate risk?

Only bank with the best. The GSIBs (Globally Systematic Important Banks) are a good group. If major US banks like JP Morgan fail, it’s not just our money we should be worried about, but our schools, neighborhoods, military, small businesses, universities, and every other institution in America.

You may also want to diversify your deposits across a few banks to prevent individual bank risk.

Make sure you choose a dependable and flexible payroll provider. Not to shill... (to completely and utterly shill), but Rollfi is a great option for your employees. Not only will your employees get paid on time, but they have the choice to take payment in USD or crypto.

In a time when people are scared the dollar will inflate like a hot air balloon, giving your employees the option to accept their salary in crypto will provide financial and mental security. Plus, they can decide how much of their salary they want to take in crypto (90/10, 50/50, etc.).

If you want to try Rollfi or know someone who will be a good fit, let's chat.

What is Twitter saying?

Make sure your employees get to choose how they want to get paid.

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Rollfi Inc does not guarantee and is in no way responsible for the accuracy of information provided in this message. All information is provided “AS IS” and with all faults. Data presented here may not reflect all activity in the market.