After reaching above $79,000 earlier in the week, Bitcoin has retreated to around $76,500, stalling its march upward from late March's lows below $65,000. Those anticipating a quick rebound should note that recent economic indicators do not support a significant bullish surge. The University of Michigan's consumer sentiment index dropped to a record low of 49.8, driven largely by inflation concerns related to the Iran conflict. Inflation expectations have also jumped, with the one-year outlook 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 sharp increase could limit the Federal Reserve's ability to signal interest rate cuts, potentially capping gains in BTC and other risk assets. Analysts warn that the Fed closely monitors inflation expectations, which can become self-fulfilling, and the recent shift may raise the bar for any near-term easing. The Fed is expected to maintain its benchmark interest rate this week, while 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, and coordinated efforts to address the KelpDAO exploit have helped DeFi tokens perform better than the broader market. The CoinDesk DeFi Select Index gained 0.5% over 24 hours, while the CoinDesk 20 declined 1.5%. Bitcoin's hourly price swings show it has broken out of an ascending trendline, trading at a discount to its 50- and 200-hour averages, indicating potential for a deeper price pullback.