Bitcoin's Rally Stalls as Economic Indicators Signal Caution

After reaching above $79,000, Bitcoin has retreated to $76,500, halting its surge from late March's lows below $65,000. Those anticipating a rapid rebound should note that recent economic data does not support a significant bullish move. The University of Michigan's Survey of Consumers revealed a record-low consumer sentiment index of 49.8, driven primarily by inflationary pressures related to the Iran conflict. Inflation expectations have also risen sharply, with the one-year gauge increasing 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 upside or slowing gains in Bitcoin and other risk assets. Analysts warn that the long-term expectations shift is particularly concerning for the Federal Reserve, 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 pricing in a potential Bank of Japan rate increase in June. In the crypto market, sustained ETF inflows are crucial for supporting spot Bitcoin prices. Coordinated industry efforts to contain the fallout from the KelpDAO exploit have helped DeFi tokens perform better than the broader market. The CoinDesk DeFi Select Index gained 0.5% over 24 hours, decoupling from the CoinDesk 20's 1.5% decline. Bitcoin's hourly price swings have broken out of an ascending trendline, and prices are trading at a discount to their 50- and 200-hour averages, indicating uptrend exhaustion and potential for a deeper price pullback.