The bitcoin price, currently at $77,253.98, has retreated from its earlier weekly high of above $79,000, pausing its ascent from late March's low of below $65,000. However, recent economic data suggests that a rapid resurgence may not be imminent. The University of Michigan's Consumer Sentiment Index has dropped to a record low of 49.8, largely due to inflation concerns exacerbated by the Iran conflict.
Furthermore, inflation expectations have surged, with the one-year gauge rising to 4.8% in April, up from 3.8% in the previous month. Long-term expectations have also increased to 3.5%, the highest since October 2025. This sharp rise in inflation expectations could limit the Federal Reserve's ability to signal interest rate cuts, potentially capping upside or slowing gains in BTC and other risk assets.
Analysts warn that for the Federal Reserve, the shift in long-term expectations is particularly concerning, as it may indicate that inflation psychology is becoming unanchored. 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 Bank of Japan rate increase in June.
In the crypto market, sustained ETF inflows are crucial for supporting spot BTC prices. Coordinated efforts to mitigate the impact of the KelpDAO exploit have helped DeFi tokens perform relatively better than the broader market. The CoinDesk DeFi Select Index saw a 0.5% gain over 24 hours, decoupling from the CoinDesk 20's 1.5% decline. Bitcoin's hourly price swings have diverged from an ascending trendline, and prices are trading below their 50- and 200-hour averages, indicating potential uptrend exhaustion and scope for a deeper price pullback.