Bitcoin's Uptrend Encounters Inflation Warning Backed by the Pentagon

As bitcoin appeared to gain momentum for a potential surge above $80,000, macroeconomic uncertainty has resurfaced as a significant obstacle. A notable development came from the Pentagon, which informed U.S. lawmakers in a classified briefing that clearing mines in the Strait of Hormuz could take at least six months and will only begin after the U.S.-Iran conflict ends. The briefing also cautioned that gasoline and oil prices may remain elevated through the midterm elections, according to the Washington Post. Persistently high energy costs could keep inflation high, limiting the Federal Reserve's ability to cut interest rates, which would create a negative environment for risk assets. Bitcoin, being highly sensitive to interest rates and global liquidity conditions, may be particularly affected. Rising costs for essentials like fuel and food could reduce investors' willingness to invest in speculative assets. These risks are already evident 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% this week, while 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 this, U.S.-listed spot bitcoin ETFs continue to show sustained demand, with funds seeing their fastest inflows in a month. However, some analysts urge caution, arguing 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 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. For analysis of today's activity in altcoins and derivatives, see Crypto Markets Today, and for a comprehensive list of events this week, see CoinDesk's 'Crypto Week Ahead.' The ratio between bitcoin's price and gold has been steadily rising and has now topped the 100-day average, with the 50-day average potentially moving above the 100-day average, confirming a bullish crossover.