Bitcoin's Upward Trend Confronts Inflation Concerns Backed by the Pentagon

As bitcoin appeared to gain momentum to break through the $80,000 threshold, macroeconomic uncertainty has reemerged as a significant obstacle. The Pentagon's classified briefing to U.S. lawmakers revealed that clearing mines in the Strait of Hormuz could take at least six months and would only commence after the U.S.-Iran conflict ends. This warning, as reported by the Washington Post, also indicated that gasoline and oil prices may remain elevated until the midterm elections. The persistent high energy costs pose a risk of keeping inflation high, limiting the Federal Reserve's ability to reduce interest rates, which is a negative backdrop for risk assets like bitcoin. The sensitivity of bitcoin to interest rates and global liquidity conditions, rather than real economic activity, makes it particularly vulnerable. Rising costs of essentials such as fuel and food could also decrease investors' willingness to invest in speculative assets. These risks are reflected in markets, with WTI crude rising to around $95 from $79 and government bond yields increasing across major economies. The U.S. 10-year yield has increased by eight basis points to 4.32%, and its U.K. counterpart has risen 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 concerns, U.S.-listed spot bitcoin ETFs continue to show sustained demand, with the fastest inflows in a month. However, some analysts urge 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. Speculation in non-serious tokens is also intensifying, with overcrowding in bullish bets. The ratio between bitcoin's price and gold has been steadily rising, with the 50-day average potentially moving above the 100-day average, confirming a bullish crossover and suggesting continued outperformance of bitcoin relative to gold.