On the occasion of the presentation of its strategic accounts to its shareholders, Elon Musk reviewed the overall financial situation and the economic outlook. The opportunity to admit half-heartedly that selling the bitcoins of the company in the second quarter of 2022 was perhaps not the idea of the century.
The worst is (perhaps) no longer to come
It was August 5, during Tesla’s annual meeting of shareholders. On this occasion, Elon Musk declared that according to him, if an economic recession were to be feared in the United States, this could ultimately only be “mild to moderate”.
In other words, Musk seems to assume that while the situation is dire, it is far from hopeless. In any case, a far cry from the previous crises that the US economy has been able to go through in recent decades. In this regard, the Fed’s regular rate-tightening actions could demonstrate their effectiveness. The key is inflation that would eventually be contained and brought back to acceptable levels.
Another indicator, the price of materials and spare parts over the next 6 months. A less gloomy projection than we would have imagined just a few weeks ago according to the billionaire.
“We kind of have a snapshot of where prices are headed over time. And the interesting thing that we see now is that most of our raw materials, most of the things that go into a Tesla – not all, more than half the price – have a downward trend in six months”
In other words, Elon Musk believes that the “peak inflation” might have been exceeded. And, if exposed in this way the information is all good news, it could leave a bitter aftertaste for the businessman who sold a few days ago. 75% of bitcoins held by Tesla.
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Selling the bottom, a universal curse
You can be a leader and a visionary in finance, and just like the Sunday beginner, buy at the highest and sell at the worst. Thus, we will have, for example, a moved thought for the boss of Ark Finance Cathie Wood who happened stripped of its Coinbase shares ($COIN) at a price of $52 (purchase price of $254, or 82% loss)… a few days before the announcement of a Coinbase-Blackrock partnership, accompanied by a 40% rebound in the price.
We then speak of “sell the bottom”, i.e. the low point of the market during a cycle. And, you see, it can happen to the best, including the richest man in the world. Indeed, after an economically disastrous and geopolitically worrying first half of 2022, it is now possible that the worst is over, from the very perception of the boss of Tesla. The key is an economic horizon that could brighten against a background of relative control of inflation, a recovery in growth, or even a gradual recovery in money printing.
In short, a context likely to restore strength to the financial and stock markets. And, especially to the so-called asset classes “risk on” of which… Bitcoin and cryptocurrencies are the emblematic representatives.
Elon Musk explained in detail why he sold most of his war chest in bitcoins. Now, the coming year should make it possible to determine whether he has thereby identified with dramatic accuracy the worst time to do so.
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