Bitcoin Rally Faces Inflation Warning Amid Rising Energy Costs

Bitcoin's recent surge towards $80,000 has been met with caution as the Pentagon warns of prolonged inflation due to elevated oil prices. The warning, issued in a classified briefing to U.S. lawmakers, highlights the potential for gasoline and oil prices to remain high through the midterm elections, potentially limiting the Federal Reserve's ability to cut interest rates. This could have a negative impact on risk assets, including bitcoin, which is highly sensitive to interest rates and global liquidity conditions. Rising energy costs may also deter investors from allocating capital to speculative assets, instead opting for essentials like fuel and food. Market trends already reflect these risks, with WTI crude climbing to around $95 and government bond yields rising across major economies. Despite sustained demand for U.S.-listed spot bitcoin ETFs, some analysts urge caution, citing the rally's lack of broad-based support in the spot market. The recent price increase is largely driven by demand in the perpetual futures market, while spot demand continues to contract. This raises the risk of a correction if traders start taking profits. Meanwhile, the market capitalization of the largest dollar-pegged stablecoin, USDT, has reached a record high of $188.88 billion, and speculation in non-serious tokens is gaining momentum. The ratio of bitcoin's price to gold has been steadily rising, with the 50-day moving average potentially crossing above the 100-day average, indicating a bullish shift in momentum.