Bitcoin's Uptrend Faces Challenge from Pentagon Warning on Inflation

As bitcoin appeared to gain momentum towards breaking through the $80,000 barrier, uncertainty in the macro environment resurfaced as an obstacle. A notable development emerged from the Pentagon, which informed U.S. lawmakers in a confidential briefing that clearing mines in the Strait of Hormuz, a crucial oil chokepoint, could take a minimum of six months and would only commence after the resolution of the U.S.-Iran conflict. The briefing also cautioned that gasoline and oil prices might remain elevated until the midterm elections, as reported by the Washington Post. The persistence of high energy costs poses a risk of sustaining inflation, thereby limiting the Federal Reserve's ability to reduce interest rates, which creates a negative environment for risk assets. Bitcoin, in particular, remains highly sensitive to interest rates and global liquidity conditions rather than actual economic activity. The rising costs of essential items such as fuel and food could also decrease investors' willingness to allocate capital to speculative assets. These risks are already manifesting in the markets, with WTI crude climbing to around $95 from $79 late last week, and government bond yields increasing across major economies. The U.S. 10-year yield has risen by eight basis points to 4.32% this week, while its U.K. 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 in tandem with yields and widening volatility spreads, signaling tighter financial conditions and increasing market risks.' This is an excerpt from the CoinDesk newsletter 'Daybook.' To stay updated, sign up here if you haven't already. In terms of key indicators, U.S.-listed spot bitcoin ETFs continue to exhibit sustained demand, with funds witnessing their fastest inflows in a month based on the seven-day moving average of net flows tracked by Glassnode. However, some analysts are advising caution, arguing that the rally lacks broad-based support in the spot market. Julio Moreno, head of research at CryptoQuant, stated on X, 'The recent Bitcoin price increase is entirely driven by demand in the perpetual futures market. Meanwhile, spot demand is still contracting, although at a slower pace. The same scenario occurred 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. Meanwhile, speculation in non-serious tokens such as M $4.2022 is reaching a fever pitch, with overcrowding in bullish bets. It's essential to remain alert. For more analysis of today's activity in altcoins and derivatives, see Crypto Markets Today. For a comprehensive list of events this week, refer to CoinDesk's 'Crypto Week Ahead.' Current Trends Today's Signal The chart displays fluctuations in the ratio between bitcoin's price and gold in candlestick format. The red line represents the 50-day moving average, the white line the 100-day moving average, and the yellow line the 200-day moving average. The ratio has been steadily rising and has now surpassed the 100-day average. More importantly, the 50-day average could soon move above the 100-day average, confirming a bullish crossover. As the name suggests, it indicates a bullish shift in momentum. This would imply continued outperformance of bitcoin relative to gold.