Bitcoin Rally Faces Hurdles as Economic Indicators Signal Caution

After reaching above $79,000 earlier in the week, Bitcoin has pulled back to around $76,500, stalling its rally from the lows below $65,000 in late March. However, recent economic data suggests that a swift return to form may be unlikely. The University of Michigan's consumer sentiment index has fallen to a record low of 49.8, driven by inflation concerns related to the Iran conflict. Inflation expectations have also surged, with the one-year gauge rising to 4.8% in April, up from 3.8% the previous month. Long-term expectations have increased 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 liquidity in the near term, as it may reinforce inflationary pressures. As a result, the upside for Bitcoin and other risk assets may be capped. Analysts believe that the Federal Reserve will keep its benchmark interest rate steady 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 Bitcoin's price on dips. The CoinDesk DeFi Select Index has gained 0.5% over 24 hours, outperforming the broader market. Bitcoin's hourly price chart shows that it has broken out of an ascending trendline, and prices are trading below their 50- and 200-hour averages, indicating uptrend exhaustion and potential for a deeper price pullback.