Bitcoin's Rally Stalls as Economic Indicators Signal Caution

After reaching above $79,000, bitcoin has pulled back to $76,500, pausing its upward momentum from the late-March lows of below $65,000. However, recent economic data suggests that a swift return to form may be unlikely. The University of Michigan's Survey of Consumers revealed a record-low consumer sentiment index of 49.8, driven primarily by inflation concerns related to the Iran conflict. Additionally, inflation expectations have risen, with the one-year gauge increasing to 4.8% in April 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 cut interest rates or implement liquidity easing measures, potentially capping the upside for bitcoin and other risk assets. Analysts note that the sharp rise in long-term expectations is particularly concerning for the Fed, 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 bitcoin prices, while coordinated efforts to contain the fallout from the KelpDAO exploit have helped DeFi tokens perform relatively well. The CoinDesk DeFi Select Index gained 0.5% over 24 hours, outperforming the broader market. Bitcoin's hourly price swings have broken out of an ascending trendline, and prices are trading below their 50- and 200-hour averages, indicating potential for a deeper price pullback.