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

Bitcoin's attempt to break through the $80,000 barrier has been hindered by renewed macroeconomic uncertainty. A classified briefing by the Pentagon to US lawmakers revealed that clearing mines in the Strait of Hormuz, a crucial oil route, could take at least six months and will only begin after the US-Iran conflict ends. The briefing also warned of potential long-term increases in gasoline and oil prices, according to 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. The cryptocurrency is particularly sensitive to interest rates and global liquidity conditions. Rising costs of essential items such as fuel and food may also discourage investors from allocating capital to speculative assets. These risks are already being reflected in the markets, with WTI crude prices rising to around $95 from $79 and government bond yields increasing across major economies. The US 10-year yield has risen by eight basis points to 4.32%, while its UK 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 these challenges, US-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 are urging caution, arguing that the rally lacks broad-based support in the spot market. Julio Moreno, head of research at CryptoQuant, noted 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 reaching fever pitch. The ratio of bitcoin's price to gold has been steadily rising and has now topped the 100-day average, with the 50-day average potentially moving above the 100-day average, confirming a bullish crossover.