Tesla recently sold all of its Bitcoin holdings. The company is seeing the emergence of a new type of economic environment characterized by the growth of risk assets. At the company's annual meeting, Musk said Tesla's component prices are already cheaper than they were six months ago.
Recovery from rising prices
The CEO said the prices of various commodities are currently trending downward, which suggests that inflation is already at the highest level. Musk has indicated that the prices of some Tesla products will drop over the next six months.
“We have some sort of vision of the direction of prices 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, but more than half of the prices - they have a downward trend within six months, ”Musk said. "This could change, of course, but the trend is down, which suggests that we have passed the peak of inflation."
The drop in prices of various commodities has favored the recovery of risk assets, such as Bitcoin. This is because the decrease in the inflation rate is expected to give the Federal Reserve less impetus to raise interest rates.
Tesla exited its entire Bitcoin exposure last month, making a profit of just $ 64 million. The company's decision to sell all of its assets is ironic, given the performance potential of cryptocurrencies should markets strengthen again.
During the company's annual meeting, Musk noted that Bitcoin could potentially return to Tesla's balance sheet at a later date. He also said that the decision to sell all of his assets is not a comment on cryptocurrency.
The company's annual meeting also produced more optimistic predictions about the future. Musk said the country's next recession will be more manageable than experts predicted. He also said that inflation will fall rapidly.
Following the positivity of Musk's comments, cryptocurrency commentators are betting on the recovery of the markets. According to Fundstrat Global Advisor, the markets have already found a bottom around the middle of the year, before the Fed starts raising interest rates.
According to the company, in the second half of 2022 the S&P 500 could reach its highest level since the beginning of the year. This would be a huge boost for the cryptocurrency markets, as it is closely related to the trend of the broader stock market.
Tesla abandons Bitcoin, Musk supports DOGE
Sunday Musk said Dogecoin is more likely to be used in transactions than Bitcoin. She made this revelation during a podcast called Full Send Podcast.
The richest man in the world is a big supporter of Dogecoin. According to him, blockchain technology can handle more transactions than Bitcoin. “Frankly, I'm a big believer because I think Dogecoin is unique, both as a meme and as a dog, and it doesn't take itself too seriously,” Musk said. "I think it's really weird that even though Doge was designed just like this ridiculous joke coin, Doge's total transaction capacity is actually higher than Bitcoin's."
Musk then added that DOGE can also be used as a payment method for various companies, such as SpaceX and Tesla. Additionally, it can be used to pay for the services of The Boring Company, which runs a transportation company in Las Vegas.
Musk said DOGE transactions can be completed in around 60 seconds, while Bitcoin transactions take around 10 minutes. Transaction speed alone is reason enough for the CEO to have heavily invested in DOGE.
Finally, Musk said DOGE's inflation factor could be a better alternative to Bitcoin than creating its own currency as a transactional currency.
