Following a brief surge above $79,000, Bitcoin has retreated to around $76,500, halting its march from late-March lows beneath $65,000. Recent economic data suggests that a rapid recovery may not be imminent.
The University of Michigan's Consumer Sentiment Index has dropped to a record low of 49.8, primarily driven by inflation concerns related to the Iran conflict. Inflation expectations have also increased, with the one-year gauge rising to 4.8% in April, up from 3.8% the previous month. Long-term expectations have climbed to 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 BTC and other risk assets. Analysts note that the Fed closely monitors inflation expectations, and the recent shift may raise the bar for any near-term easing.
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. On the crypto side, sustained ETF inflows are crucial for supporting spot BTC prices. Coordinated industry efforts have helped DeFi tokens hold up better than the broader market, with the CoinDesk DeFi Select Index gaining 0.5% over 24 hours.
Bitcoin's hourly price swings have broken out of an ascending trendline, and prices are trading below their 50- and 200-hour averages, indicating potential for a deeper price pullback.