Bitcoin Bulls Face Hurdles as Economic Data Dampens Rally Hopes

After reaching above $79,000, Bitcoin has retreated to $76,500, halting its rally from late March's low of under $65,000. Recent economic indicators suggest that a rapid recovery may not be imminent. The University of Michigan's Consumer Sentiment Index has dropped to a record low of 49.8, primarily due to inflation concerns related to the Iran conflict. Inflation expectations have also risen sharply, with the one-year gauge increasing to 4.8% in April, up from 3.8% the previous month. Long-term expectations have reached 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 gains in Bitcoin and other risk assets. Analysts warn that the long-term expectations move is the more critical data point for the Federal Reserve, as it raises the bar for any near-term easing pivot. 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. Crypto-specific factors, such as sustained ETF inflows, will be crucial in supporting spot Bitcoin prices. Coordinated industry efforts have helped DeFi tokens hold up better than the broader market, with the CoinDesk DeFi Select Index gaining 0.5% over 24 hours. 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.