Bitcoin (BTC) is short of Tesla, even though its CEO predicts that inflation in the United States has already peaked.
Speaking in Tesla 2022 Annual Meeting of Stockholders on Aug. 5, Elon Musk predicts that the coming recession in the United States will be only “mild to moderate.”
Musk on spending: ‘Trend is down’
After recently I sell almost everything of its $1.5 billion in BTC holdings, Tesla is seeing the emergence of exactly the kind of economic environment in which risk assets thrive.
During a question-and-answer session at the annual meeting, Musk revealed that six-month commodity pricing for Tesla parts is now getting cheaper, not more expensive.
Commodities, he said, are falling, suggesting that inflation has already peaked.
“We have some sense of where the prices are going over time, and the interesting thing we’re seeing now is that most of our goods, most of the things that go into Tesla — not all, more than half — the prices go down in six months “, he said.
“This is obviously subject to change, but the trend is downward, suggesting that we are past the peak of inflation.”
The recovery from an inflationary period with falling commodities provides fertile ground for a recovery in risk assets, including crypto. In theory, this comes as a 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 – with a profit of only $64 million – last month.
At the time, Musk added that BTC may return to the firm’s balance sheet at a later date and that the decision is not a comment on Bitcoin per se.
Meanwhile, the annual meeting provided further upbeat forecasts for macro funds, including a potential US recession that would be “relatively mild” and last around eighteen months. Inflation, Musk added, “will come down quickly.”
Race higher in the second half of 2022
The irony in Musk’s comments was not lost of crypto commentators and other voices are already betting on a stock recovery that is here to stay.
Among them is Fundstrat Global Advisors, which noted this week that markets have historically bottomed half a year before the Fed stops tightening by raising key interest rates.
The firm predicts that the second half of 2022 could lift the S&P 500 to 4,800 points — a boon for crypto markets still highly correlated with stock movements in general.
This is important to keep in mind
– Markets know interest rates are rising
– this is the “shock” that hurts the markets
Today’s jobs report is no “shock”
— Thomas (Tom) Lee (not the drummer) FSInsight (@fundstrat) August 5, 2022
Like Cointelegraph reported, further information on bitcoin’s potential comeback came from the world’s largest asset manager this week. BlackRock, with over $9 trillion in assets, has partnered with US exchange Coinbase to provide crypto exposure to clients.
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