Bitcoin's Rally Stalls as Economic Indicators Signal Caution

After reaching nearly $79,000, Bitcoin has retreated to $76,500, pausing its ascent from late March's low of under $65,000. However, recent economic data suggests that a strong bullish movement may not be imminent. 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. Inflation expectations have also surged, with the one-year gauge rising to 4.8% in April, up from 3.8% the previous month. Long-term expectations have increased to 3.5%, the highest since October 2025. This sharp rise could limit the Federal Reserve's ability to signal interest rate cuts, as additional easing may exacerbate inflationary pressures. As a result, the Fed's hawkish stance may cap BTC's upside potential. Analysts at Bitfinex note that the long-term expectations shift is a critical data point for the Federal Reserve, and a one-month increase of this magnitude 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. Sustained ETF inflows are crucial to supporting spot BTC on dips, while coordinated industry efforts to contain the KelpDAO exploit fallout 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 since late March indicate that the cryptocurrency has broken out of an ascending trendline, with prices trading at a discount to their 50- and 200-hour averages, pointing to uptrend exhaustion and scope for a deeper price pullback.