Bitcoin's Uptrend Hits a Roadblock with Inflation Warning from the Pentagon

Bitcoin's apparent momentum for a surge above $80,000 has been hindered by renewed macroeconomic uncertainty. A classified briefing by the Pentagon to U.S. lawmakers revealed that clearing mines in the Strait of Hormuz, a crucial oil chokepoint, could 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, as reported by the Washington Post. This could lead to persistent inflation, limiting the Federal Reserve's ability to cut interest rates and creating a challenging environment for risk assets like bitcoin, which is highly sensitive to interest rates and global liquidity. Rising costs of essentials such as fuel and food may also deter investors from allocating capital to speculative assets. These risks are already evident in markets, with WTI crude climbing to around $95 from $79 and government bond yields increasing across major economies. According to Michael Kramer, founder and CEO of Mott Capital Management, 'rising oil prices, yields, and volatility spreads signal tighter financial conditions and increased market risks.' Despite this, U.S.-listed spot bitcoin ETFs continue to show sustained demand, with the fastest inflows in a month. However, some analysts urge caution, citing the rally's lack of broad-based support in the spot market. CryptoQuant's head of research, Julio Moreno, warned that 'the recent Bitcoin price increase is driven by demand in the perpetual futures market, while spot demand is still contracting, raising the risk of a correction if traders start taking profits.' The market capitalization of USDT, the largest dollar-pegged stablecoin, has reached a record high of $188.88 billion, and speculation in non-serious tokens is intensifying, with overcrowding in bullish bets. The ratio of bitcoin's price to gold has been steadily rising, with the 50-day average potentially crossing above the 100-day average, indicating a bullish shift in momentum.