Bitcoin Bulls Face Hurdles as Economic Indicators Signal Caution

After reaching above $79,000 earlier in the week, Bitcoin has retreated to around $76,500, marking a pause in its upward trend from the late-March lows below $65,000. However, recent economic data suggests that a rapid resurgence may not be imminent. The University of Michigan's Survey of Consumers revealed a significant decline in consumer sentiment to a record low of 49.8, primarily driven by inflationary pressures linked to the Iran conflict. Furthermore, inflation expectations have increased substantially, with the one-year gauge rising to 4.8% in April, up from 3.8% the previous month, and long-term expectations reaching 3.5%, the highest level since October 2025. This surge in inflation expectations could limit the Federal Reserve's ability to cut interest rates or implement monetary easing measures, potentially capping gains in Bitcoin and other risk assets. Analysts warn that the sharp rise in long-term expectations is particularly concerning for the Fed, as it may indicate that inflation psychology is becoming unanchored. As a result, the Fed is likely to maintain its benchmark interest rate between 3.5% and 3.75% at its upcoming meeting. Meanwhile, traders are anticipating a potential rate hike by the Bank of Japan in June. In the crypto market, sustained ETF inflows are crucial for supporting Bitcoin's price on dips. Coordinated efforts to mitigate the impact of the KelpDAO exploit have helped DeFi tokens perform relatively well, with the CoinDesk DeFi Select Index gaining 0.5% over 24 hours. However, Bitcoin's price has broken out of an ascending trendline, and its current trading price is below the 50- and 200-hour moving averages, indicating potential for a deeper price pullback.