Bitcoin's apparent momentum towards breaking through the $80,000 barrier has been hindered by renewed macroeconomic uncertainty. A classified briefing by the Pentagon to US lawmakers revealed that clearing mines in the Strait of Hormuz, a crucial oil passage, could take a minimum of six months and will 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, according to the Washington Post.
The persistently high energy costs pose a risk of sticky inflation, limiting the Federal Reserve's ability to reduce interest rates, which would have a negative impact on risk assets like bitcoin. Bitcoin is particularly sensitive to interest rates and global liquidity conditions rather than real economic activity. The rising costs of essentials such as fuel and food could also lead to reduced investor appetite for speculative assets. These risks are already manifesting in the markets, with WTI crude rising to around $95 from $79 late last week, and government bond yields increasing across major economies.
The US 10-year yield has risen by eight basis points to 4.32% this week, while its UK counterpart has increased by 18 basis points to 4.96%. According to Michael Kramer, founder and CEO of Mott Capital Management, 'Oil prices are rising alongside yields and widening volatility spreads, signaling tighter financial conditions and increasing market risks.' US-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 advising 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.
The ratio of bitcoin's price to gold has been steadily rising and has now surpassed the 100-day average, with the 50-day average potentially moving above the 100-day average, confirming a bullish crossover.