Bitcoin and cryptocurrency prices have been under pressure for most of 2022, with the price of bitcoin losing almost 20% so far this year.
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The price of ethereum and other major cryptocurrencies has also fallen sharply as optimistic investors balk at the prospect of higher interest rates and slower stimulus in the era of the pandemic.
Now, Tesla billionaire Elon Musk, who sent shockwaves through the crypto world when he added $1.5 billion worth of bitcoins to Tesla’s balance sheet last year, says he owns always and would “not sell” its bitcoins, ethereum and dogecoin – advising people not to hold dollars when inflation is high.
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“As a rule of thumb, for those looking for advice on this thread, it’s usually better to own physical assets like a house or shares in companies that you believe make good products, than dollars when inflation is high,” Musk said. noted via Twitter in a conversation with bitcoin bull Michael Saylor. “I still own and will not sell my bitcoin, ethereum or doge [for what it’s worth].”
Musk, who had asked his Twitter followers what they thought of the “likely rate of inflation over the next few years,” was responding to Saylor, the chief executive of business intelligence software firm MicroStrategy, who predicted that “consumer inflation will continue almost everywhere- from time-highs, and asset inflation will continue at double the rate of consumer inflation” over the next few years, adding: “weaker currencies will collapse and the flight of capital from cash, debt and valuable stocks to scarce assets like bitcoin will intensify.”
“It’s not entirely unpredictable that you would come to this conclusion,” Musk replied, referring to Saylor’s large bitcoin holdings. MicroStrategy, a decades-old software company, has turned to a bitcoin acquisition vehicle over the past two years. MicroStrategy now holds just over 125,000 bitcoins, currently valued at around $4.8 billion.
Musk, who has become one of the most controversial figures in the crypto community over the past year, has repeatedly called for upgrades to meme-based bitcoin rival dogecoin, suggesting that the year last, doge could work with ethereum to “beat bitcoin hands down”. Although Musk said he personally owned bitcoin, ethereum, and dogecoin, it’s unclear how much or when he purchased the cryptocurrencies.
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Last week, the latest inflation figures from the United States showed that consumer price inflation had reached its highest level in four decades, as the prices of rents, fuel and food rose even before Russia’s invasion of Ukraine triggered a sharp rise in energy prices.
On Wednesday, the Federal Reserve is expected to raise interest rates for the first time since the coronavirus pandemic plunged the global economy in a bid to rein in soaring inflation.
“Markets expect the Fed to follow through on its interest rate hike plans, but by how much and how quickly is now very uncertain,” said Danni Hewson, financial analyst at AJ Bell, in an e-mail note.
“Once again, external factors are in the driver’s seat and there are big questions about the effectiveness of rate hikes in cooling these hot prices.”