Pentagon Inflation Warning Dampens Bitcoin's Bullish Trend

As bitcoin appeared poised to break through the $80,000 barrier, macroeconomic uncertainty has reemerged as a significant obstacle. A recent classified briefing by the Pentagon to U.S. lawmakers highlighted the potential for prolonged high energy costs due to the complexities of clearing mines in the Strait of Hormuz, a crucial oil supply route. This warning suggests that gasoline and oil prices may remain elevated until the U.S.-Iran conflict is resolved, which could keep inflation high and limit the Federal Reserve's ability to reduce interest rates. Given bitcoin's sensitivity to interest rates and global liquidity, rather than real economic activity, persistently high energy costs could negatively impact the cryptocurrency. Additionally, rising costs for essential items like fuel and food may lead investors to reduce their allocation to speculative assets like bitcoin. These concerns are reflected in market trends, with WTI crude prices surging to around $95 and government bond yields increasing across major economies. Despite these challenges, U.S.-listed spot bitcoin ETFs continue to attract demand, with the fastest inflows in a month. However, some analysts caution that the rally lacks broad support in the spot market, highlighting the risks of a correction if traders begin to take profits while spot demand continues to contract. The market capitalization of the largest dollar-pegged stablecoin, USDT, has reached a record high, and speculation in non-serious tokens is intensifying, with overcrowding in bullish bets. The ratio of bitcoin's price to gold has been rising, with the potential for a bullish crossover, which could indicate continued outperformance of bitcoin relative to gold.