US ‘past peak inflation’ after Tesla sells 90% of Bitcoin
Tesla’s Bitcoin (BTC) is in short supply despite its CEO predicting that inflation in the U.S. has peaked.
Speaking at Tesla 2022 Annual General Meeting of Shareholders On Aug. 5, Elon Musk predicted that the upcoming U.S. recession would only be “mild to moderate.”
Musk on costs: ‘The trend is going down’
After the recent sale of nearly all of its $1.5 billion in BTC holdings, Tesla has seen the emergence of the kind of economic landscape where risk assets are thriving.
During a question-and-answer session at the annual meeting, Musk revealed that six-month commodity pricing for Tesla parts has become cheaper, not more expensive.
Commodities are trending lower, suggesting inflation has peaked, he said.
“We’ve got a bit of an idea of where prices are going over time, and the interesting thing we’re seeing now is that most of our merchandise, most of the stuff that goes into Tesla — not all, more than half — is priced for six months. There is a downward trend,” he said.
“That could obviously change, but the trend is going down, which suggests we’re past the peak of inflation.”
Recovering from an inflationary period, commodities went downhill, providing fertile ground for a recovery in risk assets, including crypto. In theory, that’s because lower inflation means less Fed tightening, providing a favorable condition for venture capital.
If the market returns strongly and cryptocurrencies outperform, the trend will be an ironic one for Tesla, which divested almost all of its BTC exposure last month — profit only for $64 million.
At the time, Musk added that BTC could return to the company’s balance sheet at a later date and that the decision was not a commentary on Bitcoin itself.
Meanwhile, the annual meeting made further upbeat macroeconomic forecasts, including a possible U.S. recession that is “relatively mild” and lasts about 18 months. Musk added that inflation will “fall rapidly.”
The game is higher in the second half of 2022
The irony of Musk’s comments is that not lost Crypto commentators and other voices are already betting that the stock market rally will continue.
Related: Bitcoin price: Weekend volatility ‘expected’, hold at $22,000 level
These include Fundstrat Global Advisors, which noted this week that the market had historically bottomed for half a year before the Fed stopped tightening with a key rate hike.
The firm therefore forecasts that the S&P 500 could rise to 4,800 by the second half of 2022 — a boon for the cryptocurrency market, which remains closely tied to general stock market moves.
It’s important to remember this
– The market knows that interest rates are rising
– It is the “shock” that hurts the market
Today’s job report is not a ‘shock’
get “first word” in https://t.co/Vsy6WwaIxa @fs_insight https://t.co/HtuTCJANtO
— Thomas (Tom) Lee (not drummer) FSInsight (@fundstrat) August 5, 2022
As Cointelegraph reported, this week the world’s largest asset manager gained further insight into Bitcoin’s potential comeback. BlackRock, which has more than $9 trillion in assets, has partnered with U.S. exchange Coinbase to bring customers cryptocurrency exposure.
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