Bitcoin's Uptrend Faces Inflation Warning from Pentagon

As bitcoin appeared to gain momentum towards surpassing $80,000, macroeconomic concerns resurfaced as a significant obstacle. A classified briefing by the Pentagon to U.S. lawmakers revealed that clearing mines in the Strait of Hormuz, a crucial oil chokepoint, could take at least six months and will only commence after the U.S.-Iran conflict ends. 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, which could negatively impact risk assets like bitcoin. The cryptocurrency is highly sensitive to interest rates and global liquidity conditions rather than real economic activity. Rising costs of essentials such as fuel and food could reduce investors' willingness to invest in speculative assets. These risks are already reflected in markets, with WTI crude increasing to around $95 from $79 and government bond yields rising across major economies. Despite this, 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, and the recent price increase is driven by demand in the perpetual futures market, while spot demand contracts. The market capitalization of USDT has reached a record high, and speculation in non-serious tokens is increasing, with overcrowding in bullish bets.