As bitcoin appeared poised to break through the $80,000 barrier, broader economic uncertainty resurfaced as an obstacle. A significant development emerged from the Pentagon, which informed U.S.
lawmakers in a classified briefing that clearing mines in the Strait of Hormuz could take a minimum of six months, with the process commencing only after the resolution of the U.S.-Iran conflict. The briefing also cautioned that gasoline and oil prices might remain elevated until the midterm elections, as reported by the Washington Post. Prolonged high energy costs risk sustaining inflation, limiting the Federal Reserve's ability to reduce interest rates, which could negatively impact risk assets.
Bitcoin, being particularly sensitive to interest rates and global liquidity conditions rather than real economic activity, may be affected. Rising costs of essentials like fuel and food could also deter investors from allocating capital to speculative assets. These risks are manifesting in markets, with WTI crude rising to around $95 from $79 late last week, and government bond yields increasing across major economies. The U.S.
10-year yield has risen by eight basis points to 4.32% this week, 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.' U.S.-listed spot bitcoin ETFs continue to demonstrate 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 advise 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 completely driven by demand in the perpetual futures market. Meanwhile, spot demand is still contracting, albeit 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 intensifying, 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 chart illustrates fluctuations in the ratio between bitcoin's price and gold, with the ratio steadily rising and topping the 100-day average.
The 50-day average could soon surpass the 100-day average, confirming a bullish crossover, suggesting continued outperformance of bitcoin relative to gold.