Which is the correct way to create bullet points in Markdown — using spaces or tabs?

I believe either will work, so your call. If you really want to spark a tabs vs spaces holy war, I'll throw my vote in for tabs: they're semantic, whereas spaces are not--the meaning of a tab is "this is one level of indentation". Using spaces for indentation is like using <span class="italic"> instead of <i> for italics.

I’ve always used hyphens because if I later need to look at or parse the source, it may be difficult to tell what my intentions were. Moreso if for whatever reason I need to code something to handle my files—an unlikely case, but the small effort over time will be instantly realized.

In the great tabs v spaces debate I am pro spaces.

However context is important. In Obsidian I can't press shift+space to unindent, I can do this with shift+tab. So in Obsidian I use tabs.

I don't intend to access these files outside of Obsidian 99% of the time, so I never bothered to flip on the setting that inserts spaces when you use the tab key.