Bitcoin's Rally Stalls as Economic Indicators Point to Inflation Concerns

After reaching above $79,000 earlier in the week, Bitcoin has retreated to around $76,500, halting its upward momentum from the late-March lows below $65,000. Those anticipating a rapid return to its previous highs should consider that recent economic data does not support a significant bullish surge. The University of Michigan's Consumer Sentiment Index has dropped to a record low of 49.8, primarily driven by inflationary pressures linked 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 the upside or slowing gains in Bitcoin and other risk assets. Analysts note that the long-term expectations move is particularly concerning for the Federal Reserve, as it is a key indicator of whether inflation psychology is becoming unanchored. With the Fed expected to maintain its benchmark interest rate, traders are also anticipating a potential Bank of Japan rate increase in June. Meanwhile, sustained ETF inflows remain crucial for supporting spot Bitcoin prices, and coordinated industry efforts have helped DeFi tokens hold up better than the broader market. The technical analysis suggests that Bitcoin's price swings indicate uptrend exhaustion, with scope for a deeper price pullback unless it reclaims its 50- and 200-hour moving averages.