Bitcoin Bulls Face Hurdles as Economic Indicators Point to Slower Growth

Following a brief surge above $79,000, Bitcoin has retreated to $76,500, pausing its rally from the late-March lows below $65,000. Despite expectations of a swift recovery, recent economic data suggests a cautious approach may be warranted. The University of Michigan's Consumer Sentiment Index has fallen to a record low of 49.8, driven primarily by inflation concerns related to the Iran conflict. Furthermore, inflation expectations have risen sharply, with the one-year gauge increasing to 4.8% in April from 3.8% the previous month, and long-term expectations reaching 3.5%, the highest since October 2025. This increase in inflation expectations could limit the Federal Reserve's ability to signal interest rate cuts or liquidity easing, potentially capping gains in BTC and other risk assets. Analysts note that the long-term expectations shift is particularly concerning for the Fed, 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, 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 prices, and coordinated efforts to contain the fallout from the KelpDAO exploit have helped DeFi tokens hold up better than the broader market. However, the technical chart suggests that bitcoin's uptrend may be exhausting, with prices trading below their 50- and 200-hour averages, indicating potential for a deeper price pullback.