Tesla CEO Elon Musk expects more economic troubles in the coming months, possibly pointing to a negative trend for the Bitcoin and altcoin markets. Meanwhile, he also announced that Tesla would begin the layoff process. Here are the details…
Elon Musk: I have a bad feeling about the economy
Tesla CEO Elon Musk says he has a “super bad feeling” about the economy, therefore, Tesla plans to lay off 10 percent of the employees at his company. Musk said in an email that he had to “pause all hiring worldwide” at Tesla because he had a “super bad feeling” about the economy. Tesla employed nearly 100,000 people by the end of 2021, according to its annual U.S. Securities and Exchange Commission (SEC) filing.
This week, the Tesla CEO told his employees to return to work or leave the company; this demand has already faced a turnaround in Germany, where the company has a new factory. As we reported on Kriptokoin.com , many economists and experts predict that the USA has entered a recession. With record high inflation and slowing consumer spending and sales, experts believe the US may be heading towards recession.
Is the economic environment deteriorating?
Musk’s sharp warning of a potential recession and the knock-on effect for automakers comes across as one of the most direct predictions of its kind in the industry. Considering that 100,000 people are employed at Tesla, the 10 percent number will result in 10,000 layoffs. But the Tesla CEO’s economic forecast could create more problems for the markets. U.S. stock futures fell further into negative territory, while crypto markets remained somewhat stable.
Amid the ongoing economic strife, a pessimistic forecast comes from the world’s richest man. US inflation hit a 40-year high this year and is expected to remain high over the medium term. Musk said last year that he expects a recession by the spring or summer of 2022. He recently denounced the loose monetary policy seen in the past two years, adding that a recession may not be as bad as initially perceived.
How are bitcoin and cryptocurrencies affected?
Due to rising inflation, the US Federal Reserve (FED) invited to tighten its monetary policy. This proved unfavorable for risk-driven markets such as cryptocurrencies. The Fed recently started shrinking its balance sheet, which caused a minor crash in the crypto markets. With rising inflation and higher lending rates, individual investors, the main driver of crypto markets, will have less funds to invest in crypto.
With the data showing that the US economy contracted in the first quarter recently, it is said that the crypto market may be ready to experience its first great recession. Given its close relationship with the stock market, further weakness in prices for crypto may be likely. As reported, Bitcoin and altcoins experienced a sharp pullback in late April and early May, with the collapse of the S&P 500 and Nasdaq indices. Bitcoin and Ethereum are trading more than 50% below their record levels. Much of the cryptocurrency rally throughout 2020 and 2021 has been driven by loose monetary policy, which has now come to an end.
