Bitcoin's Rally Faces Hurdles as Economic Indicators Point to Caution

After reaching above $79,000, Bitcoin has pulled back to $76,500, stalling its rally from the late-March lows below $65,000. Those anticipating a quick rebound should consider that recent economic data does not support a significant bullish move. The University of Michigan's Survey of Consumers showed a decline in the consumer sentiment index to a record low of 49.8, driven largely by inflation concerns related to the Iran conflict. Inflation expectations have also increased, 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 surge in inflation expectations could limit the Federal Reserve's ability to cut interest rates or ease liquidity in the near term, as additional monetary easing may exacerbate inflationary pressures, potentially capping gains in BTC and other risk assets. Analysts note that the long-term expectations move is particularly concerning for the Federal Reserve, as it is a key variable in assessing whether inflation psychology is becoming unanchored. 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. On the crypto side, sustained ETF inflows are crucial for supporting spot BTC on dips. Coordinated industry efforts to contain the fallout from the KelpDAO exploit have helped DeFi tokens hold up better than the broader market, with the CoinDesk DeFi Select Index gaining 0.5% over 24 hours. The chart shows bitcoin's hourly price swings, indicating that prices have broken out of an ascending trendline and are trading at a discount to their 50- and 200-hour averages, pointing to uptrend exhaustion and potential for a deeper price pullback.