Like Bitcoin, which was making strides to surpass $80,000, macroeconomic factors are creating headwinds. The Pentagon recently informed U.S. lawmakers in a confidential briefing that demining the Strait of Hormuz, a key oil transit route, might take at least six months, and that operations would only commence post-resolution of the U.S.-Iranian conflict. This briefing also indicated that fuel and oil prices might continue to climb leading up to the midterm elections.
The ongoing high energy prices pose a risk to inflation levels, limiting the Federal Reserve’s ability to reduce interest rates and providing a challenging environment for riskier assets. Bitcoin itself exhibits a strong sensitivity to interest rates and global liquidity rather than to actual economic performance. Increasing essential costs could deter investors from channeling funds into speculative assets.
These market risks are becoming evident, with WTI crude oil seeing an increase from around $79 to about $95 just recently, while bond yields in major economies are also on the rise. The U.S. 10-year bond yield went up by 8 basis points to 4.32%, and the UK’s 10-year yield surged 18 basis points to 4.96%.
“With rising oil prices, increasing yields, and widening volatility spreads, we see tighter financial conditions and heightened market risks,” noted Michael Cramer, CEO of Mott Capital Management.
On the demand front, the U.S.-listed Spot Bitcoin ETF is experiencing significant inflows, reflecting strong interest, as evidenced by a recent seven-day moving average from Glassnode.
However, some analysts are advocating for caution. They argue that the recent increase in Bitcoin’s price is largely driven by demand in the perpetual futures market, while spot demand appears to be decreasing, albeit slowly. “This situation mirrors what occurred in January when Bitcoin hit $98,000. If traders begin to secure profits and spot demand continues to fall, a correction may be imminent,” said Julio Moreno, CryptoQuant’s head of research.
The market capitalization of USDT, the biggest dollar-pegged stablecoin, has reached a record high of $188.88 billion. Still, there’s speculation in less serious tokens, leading to a crowded bullish sentiment—something to keep an eye on.
What’s trending
Today’s signal
A recent chart showcases the fluctuations in Bitcoin’s price relative to gold using candlestick format. The red line indicates the 50-day moving average, the white line the 100-day, and the yellow line the 200-day moving average.
This ratio has been on the rise and currently exceeds the 100-day average. Notably, the 50-day average could soon overtake the 100-day, signaling a potentially bullish crossover, which suggests an overall positive momentum shift for Bitcoin compared to gold.
