After reaching above $79,000 earlier in the week, Bitcoin has retreated to around $76,500, stalling its rally from the late-March lows below $65,000. However, recent economic data suggests that a swift recovery may not be on the horizon.
The University of Michigan's consumer sentiment index has fallen to a record low of 49.8, driven primarily by inflation concerns linked to the Iran conflict. Furthermore, inflation expectations have surged, with the one-year gauge rising to 4.8% in April, up from 3.8% the previous month, and long-term expectations increasing to 3.5%, the highest since October 2025. This rise in inflation expectations could limit the Federal Reserve's ability to cut interest rates or ease monetary policy, as it may reinforce inflationary pressures.
As a result, this hawkish stance could cap the upside or slow the gains in Bitcoin and other risk assets. Analysts at Bitfinex noted that the shift in long-term expectations is particularly concerning for the Federal Reserve, as it raises the bar for any near-term easing pivot. The Fed is expected to maintain its benchmark interest rate between 3.5% and 3.75% this Wednesday. Meanwhile, traders are also anticipating a potential rate increase by the Bank of Japan in June.
In the crypto market, sustained ETF inflows are crucial for supporting spot Bitcoin prices. Additionally, 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.
The current chart configuration suggests uptrend exhaustion and scope for a deeper price pullback, but the bullish case could reassert itself if prices reclaim the 50- and 200-hour moving averages.