The Federal Reserve (FED) raised its interest rates to deal with the highest inflation in 40 years. This has influenced many industries, including the crypto sphere. The unpredictability brought on by the war between Russia and Ukraine and the rise in tensions with China are added to this. This has led a lot of economists to believe that the US will experience a significant economic recession.
According to Elon Mask, a period of severe crisis might last until the end of 2023 and result in several bankruptcies. The world's richest man, though, seemed confident that the situation won't be as bad as many predict.
Despite noting that “making macroeconomic forecasts is a recipe for disaster,” he predicts that the coming crisis will be “relatively mild.”
This could be due in part to how little debt most businesses have. “The debt that companies have now is relatively low, so I would probably say, a mild to moderate recession, maybe 18 months or so.”
Inflation typically decreases
The CEO of Tesla commented on inflation that he and his team had "a good view of where the prices of things going over time." This is because, in order to do its business, the automobile industry must deal with a variety of products and inputs from various global regions.
“We get a lot of information about where the prices of things are going over time because when you make millions of cars, you have to buy goods many months ahead of when they are needed … Because it's a long supply chain with a huge amount of inertia, so we have some sort of idea of where prices are heading over time. 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 – prices are falling in six months, six months from now.”
The price of the company's inputs is already falling, thus this trend should continue for the following six months. He predicts that as a result, inflation will "fall rapidly."
According to many analysts, for the cryptocurrency market to once again start a bullish cycle and reach new highs and records, an improvement in the world economy is crucial.
