Bitcoin's Uptrend Faces Challenges Amid Inflation Concerns Backed by the Pentagon

As bitcoin approached $80,000, gaining momentum for a potential breakout, macroeconomic uncertainties resurfaced. Notably, the Pentagon informed U.S. lawmakers that clearing mines in the Strait of Hormuz could take at least six months, potentially keeping oil and gasoline prices high until the midterm elections, as reported by the Washington Post. This could lead to persistent inflation, limiting the Federal Reserve's ability to lower interest rates, which negatively impacts risk assets like bitcoin. The cryptocurrency is particularly sensitive to interest rates and global liquidity rather than actual economic activity. Rising essential costs could also deter investors from speculative assets. Market risks are already evident, with WTI crude rising to around $95 and government bond yields increasing across major economies. "Rising oil prices alongside yields and widening volatility spreads signal tighter financial conditions and increasing market risks," according to Michael Kramer, founder and CEO of Mott Capital Management. Despite sustained demand for U.S.-listed spot bitcoin ETFs, analysts advise caution, citing the rally's lack of broad-based support in the spot market. "The recent Bitcoin price increase is driven by demand in the perpetual futures market, while spot demand contracts, risking a correction if traders take profits," said Julio Moreno, head of research at CryptoQuant. The market capitalization of USDT has reached a record high, and speculation in non-serious tokens is intense, with overcrowding in bullish bets. The ratio of bitcoin's price to gold has been rising, potentially indicating a bullish shift in momentum as the 50-day average may soon surpass the 100-day average.