Bitcoin's Uptrend Faces Challenge from Pentagon's Inflation Warning

Bitcoin's potential breakout above $80,000 has been hindered by renewed macroeconomic uncertainty. A recent classified briefing by the Pentagon to U.S. lawmakers highlighted that clearing mines in the Strait of Hormuz could take at least six months, potentially keeping oil and gasoline prices elevated through the midterm elections. This warning, as reported by the Washington Post, suggests that persistently high energy costs may lead to sticky inflation, limiting the Federal Reserve's ability to cut interest rates. As a result, risk assets, including bitcoin, may face a negative backdrop. Bitcoin's price is highly sensitive to interest rates and global liquidity conditions, rather than real economic activity. Rising costs for essential items like fuel and food may also reduce investors' willingness to invest in speculative assets. These risks are reflected in market trends, with WTI crude rising to around $95 and government bond yields increasing across major economies. The U.S. 10-year yield has risen by eight basis points to 4.32%, while its U.K. counterpart has increased 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 funds experiencing 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, notes 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, the largest dollar-pegged stablecoin, has reached a record high of $188.88 billion, while speculation in non-serious tokens is increasing. 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.