After reaching highs of over $79,000, Bitcoin has retreated to $76,500, pausing its ascent from late March's lows below $65,000. Those anticipating a rapid resurgence should note that recent economic data does not support a significant bullish movement. The University of Michigan's Consumer Sentiment Index has dropped to a record low of 49.8, driven primarily by inflationary pressures related to the Iran conflict.
Inflation expectations have also increased, with the one-year gauge rising to 4.8% in April from 3.8% the previous month, and long-term expectations reaching 3.5%, the highest since October 2025. This surge in inflation expectations could limit the Federal Reserve's ability to signal interest rate cuts, potentially capping gains in Bitcoin and other risk assets. Analysts warn that the sharp rise in long-term expectations is particularly concerning for the Fed, as it suggests inflation psychology may be becoming unanchored.
The Fed is expected to maintain its benchmark interest rate between 3.5% and 3.75% this Wednesday. Meanwhile, traders are pricing in a potential Bank of Japan rate increase in June. In the crypto market, sustained ETF inflows are crucial for supporting Bitcoin's price on dips.
Coordinated industry efforts to contain the fallout from the KelpDAO exploit have helped DeFi tokens perform better than the broader market. The CoinDesk DeFi Select Index gained 0.5% over 24 hours, decoupling from the CoinDesk 20's 1.5% decline. Bitcoin's hourly price swings since late March show that the cryptocurrency has broken out of an ascending trendline, and its price is trading at a discount to its 50- and 200-hour averages, indicating uptrend exhaustion and potential for a deeper price pullback.