Bitcoin's Uptrend Faces Inflation Warning from Pentagon

Bitcoin's apparent momentum towards breaking through the $80,000 barrier has been hindered by renewed macroeconomic uncertainty. A recent classified briefing by the Pentagon to U.S. lawmakers highlighted that clearing mines in the Strait of Hormuz, a crucial oil chokepoint, could take a minimum of six months and will only commence after the U.S.-Iran conflict is resolved. Additionally, the briefing warned that gasoline and oil prices may remain elevated until the midterm elections, as reported by the Washington Post. This warning has significant implications, as persistently high energy costs could lead to sticky inflation, limiting the Federal Reserve's ability to cut interest rates. Given bitcoin's sensitivity to interest rates and global liquidity conditions, rather than real economic activity, rising costs for essentials like fuel and food could reduce investors' willingness to allocate capital to speculative assets. These risks are already manifesting in markets, with WTI crude climbing to around $95 from $79 late last week, and government bond yields rising across major economies. The U.S. 10-year yield has increased by eight basis points to 4.32% this week, while its U.K. counterpart has risen by 18 basis points to 4.96%. Michael Kramer, founder and CEO of Mott Capital Management, noted that 'oil prices are rising alongside yields and widening volatility spreads, signaling tighter financial conditions and increasing market risks.' Despite this, U.S.-listed spot bitcoin ETFs continue to show sustained demand, with funds experiencing their 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, warned 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 a fever pitch, with overcrowding in bullish bets. For a more in-depth analysis of today's activity in altcoins and derivatives, see Crypto Markets Today, and for a comprehensive list of events this week, see CoinDesk's 'Crypto Week Ahead.' A notable trend is the fluctuation in the ratio between bitcoin's price and gold, which has been steadily rising and has now topped the 100-day average. If the 50-day average moves above the 100-day average, it could confirm a bullish crossover, suggesting a bullish shift in momentum and continued outperformance of bitcoin relative to gold.