Elon Musk: US ‘Passed Its Inflation Peak’ After Tesla Sold 90% of Its Bitcoin

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

In his speech at the 2022 Tesla Stockholders Annual Meetingheld on August 5, Elon Musk predicted that an upcoming US recession would only be “mild to moderate.”

Musk on costs: “The trend is down”

After recently selling nearly all of its $1.5 billion worth of BTC holdings, Tesla is seeing exactly the kind of economic landscape emerge in which risky assets thrive.

During a question-and-answer session at the Annual Meeting, Musk revealed that six-month commodity prices for Tesla parts are already getting cheaper, not more expensive.

Commodities, he said, have a downward trend, which gives an indication that inflation has already reached its highest levels.

We have a sense of where prices are going 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 – are prices tend to fall in six months”said.

“This could change, obviously, but the trend is down, which suggests that we have passed the peak of inflation.”

The recovery from an inflationary period with falling commodities provides fertile ground for a rally in risk assets, including cryptocurrencies. In theory, this is the result of lower inflation which means less tightening by the Federal Reserve, providing favorable conditions for risky investments.

If strength returns to the markets and crypto outperforms, the trend will be ironic for Tesla, which shed virtually all of its BTC exposure – at a profit of only $64 million– last month.

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

The annual meeting, meanwhile, produced more optimistic predictions about the macro economy, including a possible US recession that would be “relatively mild” and last about 18 months. Inflation, Musk added, “will fall rapidly.”

A race to the upside in the second half of 2022

The irony of Musk’s comments did not go unnoticed for cryptocurrency commentators, and other voices are already betting that the stock rebound is here to stay.

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 through key interest rate hikes.

The second half of 2022, the company predicted, could take the S&P 500 to as high as 4,800 points, which would be a help to crypto markets, still highly correlated with movements in equities in general.

This is important to note

– markets know rates are rising
– it is the “shock” that damages the markets

Today’s job report is not a “shock”

Just like reported Cointelegraph, this week the world’s largest asset manager has provided more information on the possible return of Bitcoin. BlackRock, with more than $9 trillion in assets, has partnered with US exchange Coinbase to offer crypto exposure to its clients.

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Elon Musk: US ‘Passed Its Inflation Peak’ After Tesla Sold 90% of Its Bitcoin