US ‘past peak inflation’ after Tesla sells 90% of Bitcoin

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Bit­coin (BTC) is in short sup­ply at Tes­la, even as its CEO pre­dicts that Unit­ed States infla­tion has already peaked.

Speak­ing at Tesla’s 2022 Annu­al Meet­ing of Stock­hold­ers on Aug. 5, Elon Musk pre­dict­ed that an upcom­ing Unit­ed States reces­sion would only be “mild to moderate.”

Musk on costs: “The trend is down”

After recent­ly sell­ing almost all of its $1.5 bil­lion BTC hold­ings, Tes­la is see­ing the emer­gence of exact­ly the kind of eco­nom­ic land­scape in which risk assets thrive.

Dur­ing a Q&A ses­sion at the Annu­al Meet­ing, Musk revealed that six-month com­modi­ties pric­ing for Tes­la parts is already get­ting cheap­er, not more expensive. 

Com­modi­ties, he said, are trend­ing down, pro­vid­ing a hint that infla­tion has already hit its high­est levels. 

“We sort of have some insight into where prices are head­ed over time and the inter­est­ing thing that we’re see­ing now is that most of our com­modi­ties, most of the things that go into a Tes­la — not all, more than half — the prices are trend­ing down in six months,” he said.

“This could change, obvi­ous­ly, but the trend is down, which sug­gests that we are past peak inflation.” 

The recov­ery from an infla­tion­ary peri­od with com­modi­ties head­ing down­hill pro­vides fer­tile ground for a recov­ery in risk assets, includ­ing cryp­to. The­o­ret­i­cal­ly, this comes as a result of low­er infla­tion mean­ing less tight­en­ing by the Fed­er­al Reserve, pro­vid­ing favor­able con­di­tions for risk-on investments.

Should strength return to mar­kets and cryp­to out­per­forms, the trend will be an iron­ic one for Tes­la, which divest­ed itself of prac­ti­cal­ly all its BTC expo­sure — at a prof­it of just $64 mil­lion — last month. 

At the time, Musk added that BTC could return to the firm’s bal­ance sheet at a lat­er date, and that the deci­sion was not a com­men­tary on Bit­coin per se.

The Annu­al Meet­ing, mean­while, pro­duced fur­ther opti­mistic pre­dic­tions on macro, includ­ing a poten­tial U.S. reces­sion being “rel­a­tive­ly mild” and last­ing approx­i­mate­ly eigh­teen months. Infla­tion, Musk added, will “drop rapidly.”

A race higher in the second half of 2022

The irony of Musk’s com­ments was not lost on cryp­to com­men­ta­tors, and oth­er voic­es are already bet­ting on a rebound in stocks being here to stay.

Relat­ed: Bit­coin price: week­end volatil­i­ty ‘expect­ed’ with $22K lev­el to hold

Among them is Fund­strat Glob­al Advi­sors, which this week not­ed that mar­kets have his­tor­i­cal­ly found a bot­tom half a year before the Fed stops tight­en­ing via key inter­est rate hikes.

The sec­ond half of 2022, the firm thus pre­dict­ed, could take the S&P 500 to 4,800 points — a boon for cryp­to mar­kets still heav­i­ly cor­re­lat­ed with moves in equi­ties in general.

As Coin­tele­graph report­ed, fur­ther insight into Bit­coin’s poten­tial come­back came from the world’s largest asset man­ag­er this week. Black­Rock, with over $9 tril­lion in assets, has part­nered with U.S. exchange Coin­base to bring cryp­to expo­sure to clients.

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. 



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