While talking to his Twitter followers that are in excess of 77 million about different ways of hedging against inflation, SpaceX and Tesla’s founder, Elon Musk reiterated that he will not sell his cryptocurrency. He said that he would continue to hold onto his stack of dogecoin (DOGE), bitcoin (BTC) and Ethereum (ETH). Musk made a Twitter post recently where he asked the community about their predictions regarding the inflation rate in the next couple of years. He went on to say that the inflationary pressures were already taking a toll on SpaceX and Tesla because the prices of raw materials were increasing constantly.
In response to the tweet, Michael Saylor, the chief executive of MicroStrategy and bitcoin bull, stated that USD consumer inflation was expected to reach new all-time highs. He also added that as far as asset inflation is concerned, it is expected to increase at double the rate of that of consumer inflation. Saylor said that there would be a collapse in weaker currencies and people would jump onto the bitcoin bandwagon from value stocks, cash, scarce property and debt. Musk also said that in times of high inflation, it is better for people to buy stock of companies that make reliable products, or buy physical objects as opposed to fiat currencies.
He added that he would still not part with his Bitcoin, Ethereum and Dogecoin holdings, revealing for the first time that he also owns ETH, something that he has not done before. In the last couple of months, inflation has become a rather hot topic. According to the statistics provided by the US Labor Department last week, the Consumer Price Index (CPI) had surged to a 40 year high of 7.9% back in February. The Federal Reserve is expected to counter this rising inflation by hiking the interest rate several times this year, one of which can happen on Wednesday.
There are several factors that have contributed to the current inflation, including money printing, the global supply chain crisis in 2021 brought on by the COVID-19 pandemic and the Russian war in Ukraine more recently. While inflation has been referred to as ‘transitory’ by a lot of officials who claim that it would cool off, but industry experts are sure that the risk of recession is high, particularly after Russia’s invasion of Ukraine in the previous month. Goldman Sachs’ economists have said that there are 35% chances of a recession in the United States in the next year.
The role of crypto assets in such situation remains unclear for the most part, but crypto enthusiasts are now arguing a new point. Timothy Stebbing, the Dogecoin Foundation’s Product Lead said that the current economic situation shows that a new reserve currency is needed, which is not under the control of any centralized entity or the government. He said that it could help in avoiding a global conflict and while decentralized crypto could also be used, there is a possibility of it getting sanctioned so it may not be effective.
