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

Bitcoin's apparent momentum towards a breakout above $80,000 has been hindered by renewed macroeconomic uncertainty. A classified Pentagon briefing to US lawmakers revealed that clearing mines in the Strait of Hormuz, a crucial oil chokepoint, could take at least six months and may only commence after the US-Iran conflict is resolved. The briefing also cautioned that gasoline and oil prices may remain elevated until the midterm elections, potentially keeping inflation high and limiting the Federal Reserve's ability to cut interest rates. This could have negative implications for risk assets, including bitcoin, which is highly sensitive to interest rates and global liquidity conditions. Rising costs of essentials like fuel and food may also deter investors from allocating capital to speculative assets. Markets are already reflecting these risks, with WTI crude prices increasing to around $95 and government bond yields rising across major economies. Despite sustained demand for US-listed spot bitcoin ETFs, some analysts are urging caution, citing the lack of broad-based support in the spot market. The recent bitcoin price increase is largely driven by demand in the perpetual futures market, 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, and speculation in non-serious tokens is intensifying. A bullish crossover in the ratio of bitcoin's price to gold may indicate continued outperformance of bitcoin relative to gold.