Bitcoin's Uptrend Faces Inflation Concerns Backed by the Pentagon

Bitcoin's apparent momentum towards breaking the $80,000 barrier has been hindered by renewed macroeconomic uncertainty. A significant development emerged from a classified Pentagon briefing to U.S. lawmakers, which stated that clearing mines in the Strait of Hormuz, a crucial oil passage, could take a minimum of six months and will only commence after the resolution of the U.S.-Iran conflict. The briefing, as reported by the Washington Post, also cautioned that gasoline and oil prices may remain elevated until the midterm elections. This persistent inflation could limit the Federal Reserve's ability to reduce interest rates, creating a challenging environment for risk assets like bitcoin, which are highly sensitive to interest rates and global liquidity rather than actual economic activity. The rising costs of essential items such as fuel and food could also deter investors from allocating capital to speculative assets. These risks are reflected in the market, with WTI crude prices increasing to around $95 from $79 last week, and government bond yields rising across major economies. The U.S. 10-year yield has risen by eight basis points to 4.32% this week, while its U.K. counterpart has increased by 18 basis points to 4.96%. According to Michael Kramer, founder and CEO of Mott Capital Management, 'Oil prices are rising alongside yields and widening volatility spreads, signaling tighter financial conditions and increasing market risks.' Despite this, U.S.-listed spot bitcoin ETFs continue to show sustained demand, with the fastest inflows in a month based on the seven-day moving average of net flows tracked by Glassnode. However, analysts urge caution, noting that the rally lacks broad support in the spot market. Julio Moreno, head of research at CryptoQuant, warned that 'The recent Bitcoin price increase is completely driven by demand in the perpetual futures market. Meanwhile, spot demand is still contracting (although at a slower pace). The same happened in January, when Bitcoin peaked at $98K. There are risks of a correction if traders start taking profits while spot demand continues to contract.' The market capitalization of USDT, the largest dollar-pegged stablecoin, has reached a record high of $188.88 billion, while speculation in non-serious tokens is intensifying, with overcrowding in bullish bets. For more analysis on today's altcoin and derivatives activity, see Crypto Markets Today, and for a comprehensive list of this week's events, see CoinDesk's 'Crypto Week Ahead.' A key signal to watch is the ratio between bitcoin's price and gold, which has been steadily rising and has now surpassed the 100-day average, potentially leading to a bullish crossover that suggests continued outperformance of bitcoin relative to gold.