Bitcoin's Uptrend Faces Challenge from Pentagon's Inflation Warning

As bitcoin appeared to gain momentum to break through the $80,000 threshold, concerns over the macroeconomic landscape resurfaced. The Pentagon recently briefed U.S. lawmakers, warning that clearing mines from the Strait of Hormuz, a crucial oil passage, could take a minimum of six months and will only commence after the U.S.-Iran conflict is resolved. This briefing, as reported by the Washington Post, also cautioned that gasoline and oil prices might remain elevated until the midterm elections, potentially keeping inflation high and limiting the Federal Reserve's ability to lower interest rates. This scenario poses a negative outlook for risk assets, including bitcoin, which is highly sensitive to interest rates and global liquidity. Rising costs of essential items like fuel and food could also deter investors from allocating capital to speculative assets. These risks are reflected in markets, with WTI crude prices surging to around $95 from $79 and government bond yields increasing across major economies. Despite sustained demand for U.S.-listed spot bitcoin ETFs, some analysts advise caution, citing the lack of broad-based support in the spot market. The market capitalization of USDT, the largest dollar-pegged stablecoin, has reached a record high, while speculation in other tokens is intensifying. The ratio of bitcoin's price to gold has been rising, with a potential bullish crossover on the horizon, suggesting continued outperformance of bitcoin relative to gold.