Following a brief surge above $79,000, Bitcoin has retreated to around $76,500, stalling its recovery from late March's lows below $65,000. However, recent economic data suggests that a swift rebound may be unlikely.
The University of Michigan's consumer sentiment index has reached an all-time low of 49.8, driven primarily by inflation concerns related to the Iran conflict. Inflation expectations have also surged, with the one-year gauge rising to 4.8% and long-term expectations increasing to 3.5%, the highest since October 2025.
This sharp rise in inflation expectations could limit the Federal Reserve's ability to implement interest-rate cuts or monetary easing, potentially capping gains in Bitcoin and other risk assets. Analysts warn that the Fed is closely monitoring these expectations, and a significant shift could raise the bar for any near-term easing.
The central bank is expected to maintain its benchmark interest rate between 3.5% and 3.75% this Wednesday. Meanwhile, traders are pricing in a potential rate increase by the Bank of Japan in June. In the crypto market, sustained ETF inflows are crucial for supporting Bitcoin's price on dips.
Coordinated industry efforts have helped DeFi tokens hold up relatively well despite the KelpDAO exploit. The CoinDesk DeFi Select Index gained 0.5% over 24 hours, outperforming the broader market. Bitcoin's hourly price chart shows a dive out of an ascending trendline, with prices trading below their 50- and 200-hour averages, indicating potential for a deeper price pullback.