Bitcoin Bulls Face Hurdles as Economic Indicators Point to Caution

Following a brief surge above $79,000, Bitcoin has retreated to $76,500, stalling its rally from the late-March lows below $65,000. Those anticipating a swift resurgence should note that recent economic data does not support a significant bullish movement. The University of Michigan's Consumer Sentiment Index has plummeted to a record low of 49.8, driven primarily by inflationary pressures linked to the Iran conflict. Inflation expectations have also spiked, with the one-year gauge 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 or liquidity easing, potentially capping upside or slowing gains in BTC and other risk assets. Analysts warn 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 pricing in a potential Bank of Japan rate increase in June. In the crypto market, sustained ETF inflows are crucial for supporting spot BTC on dips, and coordinated industry efforts have helped DeFi tokens hold up better than the broader market. The CoinDesk DeFi Select Index gained 0.5% over 24 hours, decoupling from the CoinDesk 20's 1.5% decline. Bitcoin's hourly price swings have dived out of an ascending trendline, and prices are trading at a discount to their 50- and 200-hour averages, indicating uptrend exhaustion and scope for a deeper price pullback.