Bitcoin's Uptrend Faces Hurdle as Pentagon Warns of Prolonged Inflation

As bitcoin appeared poised to break through the $80,000 threshold, broader economic uncertainty has reemerged, posing a challenge to its momentum. A classified briefing by the Pentagon to US lawmakers highlighted that clearing mines in the Strait of Hormuz, a critical oil passage, could take a minimum of six months and will only commence after the resolution of the US-Iran conflict. The briefing, as reported by the Washington Post, 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 reduce interest rates. This scenario presents a negative outlook for risk assets, including bitcoin, which is particularly sensitive to interest rates and global liquidity. Rising costs of essential items like fuel and food could further deter investors from allocating capital to speculative assets. Market indicators such as the climb of WTI crude to around $95 and the increase in government bond yields across major economies reflect these risks. Despite sustained demand for US-listed spot bitcoin ETFs, some analysts advise caution, citing the lack of broad-based support in the spot market and the potential for a correction if traders begin taking profits amidst contracting spot demand.