Elon Musk warns: His plans for the dollar could delay Bitcoin’s price rise

Elon Musk, CEO of SpaceX and Tesla, warns that the plans of the incoming American administration led by Donald Trump could potentially put pressure on the Bitcoin (BTC) price. Although Trump has announced his intention to boost the cryptocurrency market, Musk points to possible negative effects of the new policy.

Goddamn impressive explanation of inflation

My 2025 prediction was dogecoin goes up if Elon’s DOGE is successful, and this is why

pic.twitter.com/p77b78sIco

— Garry Tan (@garrytan) January 7, 2025

Musk heads new consulting firm

As an advisor to Trump, Musk will head the newly formed advisory office, the Department of Government Efficiency (DOGE). This office was created to improve the efficiency of the US government by reducing spending and fighting inflation. Musk emphasizes that excessive government spending is a direct cause of inflation, which often leads to an increase in the amount of dollar printing.

A recent study from Princeton University supports Musk’s concerns. According to the study, 2021 budget deficits were responsible for 30% of inflation in 2021-2022. Musk notes that curbing this inflation is necessary, but warns that it could also reduce demand for Bitcoin as an inflation hedge.

Impact on Bitcoin and Crypto

Bitcoin is seen by many investors as a hedge against a declining purchasing power of the dollar. But Musk points out an important risk: If inflation falls and the dollar becomes more stable, demand for BTC and other cryptocurrencies could decline. Less inflation means crypto prices may rise more slowly.

Bitcoin reacts to Musk’s warning

On social media, Musk stressed that the relationship between the value of the dollar and cryptocurrencies is crucial for price movements. His comments appear to have influenced the recent correction in Bitcoin’s price. After briefly rising above $100,000, the price fell to $93,600 at the time of writing.

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Margharet Tess

Editor, Developer at Cryptheory Labs

I have been active in the cryptocurrency world for over 6 years, during which I have written countless articles about this sector. What fascinates me most about cryptocurrencies is their technological aspect and the problems they aim to solve. In the past three years, I have ventured into app development and am currently working on a larger project called P2E Buzzer. Stay tuned for the surprise. 🙂 My previous experiences: Business2Community.com, TradingPlatforms.com

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