Elon Musk: Cryptocurrency is protection from inflation
Regardless of the economic system, everyone wants to see a steady and positive development dynamic. However, global practice defines its own set of rules. Recent events are a prime example of this. The world suffered multiple waves of economic crisis for a short time. Cryptocurrencies have also been impacted. Even though cryptocurrency inflation is smaller than that of fiat money, it is nevertheless occurring. The article explains how cryptocurrency can prevent inflation, according to Elon Musk.
Elon Musk recently published the advice against the backdrop of the United States’ longest period of record inflation in 40 years. Elon Musk, the CEO of Tesla, recommended where to invest to avoid inflation. In the tweet, he stated that when inflation is strong, it is preferable to hold real assets such as real estate or stocks of firms that you believe generate high-quality goods rather than dollars. Having said that, he is not going to sell his cryptocurrency. Musk went on to say that his cryptocurrency portfolio includes BTC, ETH, and dogecoin. Moreover, he is not going to sell them in the near future.
Inflation in the USA
The year’s inflation rate in the United States was 7.2 %, which is more than economists predicted. In December 2022, monetary prices in the United States increased by 7.5% year on year, the greatest amount since February 1982. As a result, the price change enhances the possibility that the US Federal Reserve will raise its benchmark rate by 0.5% rather than 0.25%. According to the Bureau of Labor Statistics, most economists anticipate a slowing of price increases as firms adjust to normalize demand.
Analysts assessed the inflation of cryptocurrencies from 2014 to 2016. Bitcoin and the USD were taken for example. The results reflect a drop in inflation due to a halt in issuance. Bitcoin is regarded as one of the most stable cryptocurrencies since its total supply is limited to 21 million BTC. Because of the issuance restriction, simple calculations indicate that Bitcoin’s inflation tends to be zero. In this context, Bitcoin’s exchange rate continues to rise against the US dollar as indicated by the profitability.
Consequently, Musk showed solidarity with MicroStrategy CEO Michael Saylor. According to Saylor’s tweet, there are the preconditions for the collapse of fiat currencies and a mass flight of investors into cryptocurrencies. As you know, Elon Musk is also a well-known cryptocurrency enthusiast. He has specifically included bitcoin in the balance of Tesla. We all know the cases when Musk’s statements have caused dramatic fluctuations in cryptocurrency rates. This time, following Musk’s remark, bitcoin surged before resuming its former positions. Previously, in late February, Sam Bankman-Fried, the CEO of FTX, predicted an increase in demand for bitcoin due to the Russian invasion of Ukraine.
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Valentyna Bereza, Team bit4you.