Bitcoin (BTC) is in short supply at Tesla, even with its CEO predicting that US inflation has already peaked.
Speaking at Tesla’s 2022 annual meeting of stockholders on August 5, Elon Musk predicted that the next recession in the United States would be “mild to moderate.”
Musk on Costs: “Trend Down”
After selling nearly $1.5 billion worth of bitcoin holdings, Tesla is seeing the emergence of the kind of economic landscape in which risk assets are booming.
During a question-and-answer session at the annual meeting, Musk revealed that six-month commodity pricing for Tesla parts is actually getting cheaper, not more expensive.
He said that commodities are trending lower, giving a hint that inflation has already reached its highest levels.
“We kind of have some insight into the direction prices are going over time, and the interesting thing we’re seeing right now is that most of our goods, most of the things that go into Tesla — but not all, more than half of the prices — are trending down in six months from now, Musk said.
“That could change, of course, but the trend is downward, which indicates that we are past the peak of inflation.”
Recovering from a period of inflation with commodities heading lower provides fertile ground for recovery in risky assets, including cryptocurrencies. In theory, this comes as a result of lower inflation which means less tightening by the US Federal Reserve, providing favorable conditions for risky investments.
If power returns to the markets and crypto outperforms, the trend will be ironic for Tesla, which stripped itself of practically all exposure to BTC — with a profit of just $64 million — last month.
At the time, Musk added that BTC could return to the company’s balance sheet at a later time, and that the decision was not a comment on Bitcoin per se.
Meanwhile, the shareholder meeting produced more optimistic forecasts about the overall economy, including a possible “relatively mild” recession in the United States lasting nearly eighteen months. Musk added that inflation will “come down fast.”
A higher race in the second half of 2022
The irony was not lost on Musk’s comments to crypto commentators, and there are other voices already betting on a rally in stocks to stay.
Related: Bitcoin Price: Weekend volatility is “expected” with $22,000 stable
Among them is Fundstrat Global Advisors, which this week indicated that markets had historically found a half-year low before the Fed stopped tightening by raising key interest rates.
And so the company predicted that the second half of 2022 could take the S&P 500 index to 4,800 points — a boon for cryptocurrency markets that are still closely tied to moves in stocks in general.