Bitcoin's Upward Trajectory Confronts Inflation Warning Backed by the Pentagon

As bitcoin appeared to gain momentum 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 that clearing mines in the Strait of Hormuz, a critical oil chokepoint, could take a minimum of six months and will only commence after the resolution of the U.S.-Iran conflict. The briefing also cautioned that gasoline and oil prices may remain elevated until the midterm elections, according to a report by the Washington Post. The persistence of high energy costs poses a risk of keeping inflation high, which in turn limits the Federal Reserve's ability to reduce interest rates. This scenario presents a negative backdrop for risk assets, with bitcoin being particularly sensitive to interest rates and global liquidity conditions rather than actual economic activity. Furthermore, rising costs of essentials such as fuel and food could diminish investors' willingness to invest in speculative assets. These risks are already manifesting in the markets, with WTI crude climbing to around $95 from $79 late last week. Government bond yields are also rising across major economies, with the U.S. 10-year yield increasing by eight basis points to 4.32% this week and its U.K. counterpart rising by 18 basis points to 4.96%. According to Michael Kramer, founder and CEO of Mott Capital Management, "Oil prices are rising in tandem with yields and widening volatility spreads, signaling tighter financial conditions and increasing market risks." U.S.-listed spot bitcoin ETFs continue to exhibit 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, noted, "The recent Bitcoin price increase is entirely driven by demand in the perpetual futures market. Meanwhile, spot demand is still contracting, albeit at a slower pace. This is reminiscent of 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. Speculation in non-serious tokens is also intensifying, with overcrowding in bullish bets. For further analysis of today's activity in altcoins and derivatives, see Crypto Markets Today. For a comprehensive list of events this week, refer to CoinDesk's 'Crypto Week Ahead.' The current trend Today's signal A chart displaying the fluctuations in the ratio between bitcoin's price and gold in candlestick format shows the red line representing the 50-day moving average, the white line representing the 100-day moving average, and the yellow line representing the 200-day moving average. The ratio has been steadily rising and has now surpassed the 100-day average. More importantly, the 50-day average is poised to move above the 100-day average, confirming a bullish crossover, which suggests a bullish shift in momentum and indicates continued outperformance of bitcoin relative to gold.