As bitcoin appeared to gain momentum to break through the $80,000 threshold, 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 could take at least six months and will only commence after the U.S.-Iran conflict is resolved. This briefing also cautioned that gasoline and oil prices might remain elevated until the midterm elections, according to the Washington Post.
The persistent high energy costs pose a risk of maintaining inflation at high levels, limiting the Federal Reserve's ability to reduce interest rates. This scenario creates a negative backdrop for risk assets, with bitcoin being particularly sensitive to interest rates and global liquidity conditions rather than actual economic activity. The rising costs of essential items like fuel and food could also lead to a decrease in investors' willingness to allocate capital to speculative assets.
These risks are already manifesting in the markets, with WTI crude prices increasing to around $95 from $79 late last week, 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 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 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, and speculation in non-serious tokens is reaching a fever pitch, with overcrowding in bullish bets. The ratio between bitcoin's price and gold has been steadily rising, topping the 100-day average, and 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.