US ‘Peak Inflation’ After Tesla Sold 90% of Bitcoin

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

Speaking at Teslas 2022 Annual General Meeting of Shareholders on August 5, Elon Musk predicted that an impending recession in the United States would be only “mild to moderate.”

Musk on costs: ‘Trend is down’

Having recently sold nearly all of its $1.5 billion BTC shares, Tesla is seeing the emergence of exactly the kind of economic landscape in which risky assets thrive.

During a question-and-answer session at the annual meeting, Musk revealed that the price of semi-annual raw materials for Tesla parts is already getting cheaper, not more expensive.

Commodities, he said, are on a downward trend, indicating that inflation has already reached its highest level.

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

“Of course this could change, but the trend is downward, suggesting we are past peak inflation.”

The recovery from an inflationary period with commodities going downhill provides fertile ground for a recovery of risky assets, including crypto. Theoretically, this is the result of lower inflation, meaning that the Federal Reserve is tightening less, providing favorable conditions for risky investments.

Should the market strengthen again and crypto outperform, the trend will be ironic for Tesla, which divested virtually all of its BTC exposure last month – making a profit of just $64 million.

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

The annual meeting, meanwhile, delivered further optimistic forecasts on the macro, including a possible recession in the US that would be “relatively mild” and last about 18 months. Inflation, Musk added, will “fall 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 here to stay.

Related: Bitcoin Price: Weekend Volatility ‘Expected’ To Hold At $22K Level

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

The second half of 2022, the company forecast, could push the S&P 500 to 4,800 points — a boon for crypto markets that are still highly correlated with moves in stocks in general.

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

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