Elon Musk warns his dollar plan could slow Bitcoin price growth: Here's why

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Elon Musk's recent comments reveal his views on Bitcoin prices, especially in the context of the impact that new government policies may have on the cryptocurrency market. According to Musk, a new administration could slow Bitcoin price growth, mainly because policies to reduce deficits and curb inflation will lead to slower price increases in the overall economy, which will affect the performance of assets such as Bitcoin.

Musk's focus on government efficiency

Musk will lead a new White House counsel's office called "DOGE" ("Department of Government Efficiency") and will be characterized by his love for Dogecoin. This office aims to improve government efficiency by reducing excessive spending in Washington and slowing the growth of the federal budget deficit. Musk believes that by reducing deficits and inflationary pressures, the overall economic price level will be suppressed.

His view suggests that as government spending decreases and deficits fall, the velocity of money in the economy slows, which could reduce upward pressure on financial markets, including Bitcoin. In other words, Musk believes that policies to reduce inflation and deficits could have an adverse effect on cryptocurrency prices.

The relationship between Bitcoin and inflation

Bitcoin is often seen as an asset that hedges against inflation, especially when the dollar depreciates or traditional financial markets face pressure. Some investors use Bitcoin, Ripple (XRP), Dogecoin (DOGE), etc. as a means of storing value to avoid the shrinking purchasing power of traditional currencies. Especially in times of high inflation, Bitcoin's fixed supply and decentralized nature make it an attractive investment option.

However, Musk warned that if the Trump administration's policies successfully promote deficit and inflation control, this will slow the growth of asset prices, including Bitcoin. Lower inflation means that the demand for Bitcoin as a hedge tool may decrease, affecting its price trend.

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