Bitcoin's Upward Trajectory Faces Challenge from Pentagon's Inflation Alert

As bitcoin appeared poised to break through the $80,000 threshold, fresh macroeconomic uncertainty has emerged as a significant obstacle. A classified briefing by the Pentagon to U.S. lawmakers revealed that clearing mines in the Strait of Hormuz, a critical oil passage, may take at least six months and will only commence after the U.S.-Iran conflict is resolved. The briefing also cautioned that gasoline and oil prices may remain elevated until the midterm elections, according to the Washington Post. Prolonged high energy costs could keep inflation elevated, limiting the Federal Reserve's ability to reduce interest rates, which would negatively impact risk assets like bitcoin. The cryptocurrency remains highly sensitive to interest rates and global liquidity conditions. Rising costs for essential items like fuel and food could also deter investors from allocating capital to speculative assets. These risks are already manifesting in markets, with WTI crude rising to around $95 from $79 and government bond yields increasing across major economies. "Oil prices are rising alongside yields and widening volatility spreads, signaling tighter financial conditions and increasing market risks," said Michael Kramer, founder and CEO of Mott Capital Management. 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, some analysts urge caution, citing the rally's lack of broad-based support in the spot market. 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.