Bitcoin's Uptrend Faces Obstacles Amid Pentagon Warning on Inflation

Bitcoin's apparent momentum towards breaking through the $80,000 barrier has been hindered by renewed macroeconomic uncertainty. A significant development emerged from a classified Pentagon briefing to U.S. lawmakers, indicating that clearing mines in the Strait of Hormuz could take a minimum of six months and will only commence after the resolution of the U.S.-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 poses a negative backdrop for risk assets, including bitcoin, which is highly sensitive to interest rates and global liquidity conditions rather than real economic activity. The increase in essential costs, such as fuel and food, could also deter investors from allocating capital to speculative assets. These risks are manifesting in markets, with WTI crude climbing to around $95 from $79 and government bond yields rising across major economies. The U.S. 10-year yield has increased by eight basis points to 4.32%, and its U.K. counterpart has risen 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.' Despite these challenges, U.S.-listed spot bitcoin ETFs continue to show sustained demand, with the fastest inflows in a month based on the seven-day moving average of net flows tracked by Glassnode. However, some analysts advise caution, suggesting that the rally lacks broad-based support in the spot market. Julio Moreno, head of research at CryptoQuant, noted 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 market capitalization of USDT has reached a record high of $188.88 billion, while speculation in non-serious tokens is intensifying, with overcrowding in bullish bets. The ratio between bitcoin's price and gold has been steadily rising, with the 50-day average potentially moving above the 100-day average, confirming a bullish crossover.