As bitcoin appeared poised to break through the $80,000 barrier, uncertainty in the macroeconomic environment resurfaced as a significant obstacle. A classified briefing by the Pentagon to U.S.
lawmakers highlighted that clearing mines in the Strait of Hormuz, a crucial oil chokepoint, may take a minimum of six months and will only commence after the U.S.-Iran conflict is resolved. The briefing also cautioned that gasoline and oil prices might remain elevated until the midterm elections, as reported by the Washington Post. Persistently high energy costs could lead to sticky inflation, limiting the Federal Reserve's ability to reduce interest rates. This creates a challenging environment for risk assets, particularly bitcoin, which is highly sensitive to interest rates and global liquidity conditions rather than actual economic activity.
Rising costs for essential items like fuel and food could also reduce investors' willingness to invest in speculative assets. These risks are already evident in the markets, with WTI crude climbing to around $95 from $79 late last week, and government bond yields increasing across major economies. The U.S.
10-year yield has risen by eight basis points to 4.32% this week, while its U.K. counterpart has increased by 18 basis points to 4.96%.
"The surge in oil prices, alongside rising yields and widening volatility spreads, signals tighter financial conditions and increasing market risks," stated Michael Kramer, founder and CEO of Mott Capital Management. Meanwhile, U.S.-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 urging caution, arguing that the rally lacks broad-based support in the spot market. "The recent Bitcoin price increase is driven solely by demand in the perpetual futures market.
Meanwhile, spot demand is still contracting, albeit at a slower pace. This is similar to what happened in January when Bitcoin peaked at $98K.
There is a risk of correction if traders start taking profits while spot demand continues to contract," said Julio Moreno, head of research at CryptoQuant, on X. The market capitalization of USDT, the largest dollar-pegged stablecoin, has reached a record high of $188.88 billion. Speculation in non-serious tokens is also reaching a fever pitch, with overcrowding in bullish bets. For analysis of today's activity in altcoins and derivatives, see Crypto Markets Today.
For a comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead." The chart displays fluctuations in the ratio between bitcoin's price and gold in candlestick format. The red line represents the 50-day moving average, the white line the 100-day moving average, and the yellow line the 200-day moving average. The ratio has been steadily rising and has now topped the 100-day average. More importantly, the 50-day average could soon move above the 100-day average, confirming a bullish crossover, which suggests a bullish shift in momentum, indicating continued outperformance of bitcoin relative to gold.