Following a brief surge above $79,000, Bitcoin has retreated to $76,500, putting the brakes on its rally from the late-March lows of under $65,000. However, recent economic data suggests that a rapid resurgence may not be on the horizon. The University of Michigan's Survey of Consumers revealed a sharp decline in consumer sentiment to a record low of 49.8, driven primarily by inflation concerns linked to the Iran conflict. Furthermore, inflation expectations have spiked, with the one-year forecast jumping to 4.8% in April from 3.8% in the previous month, and long-term expectations reaching 3.5%, the highest since October 2025.
These developments could limit the Federal Reserve's ability to cut interest rates or implement monetary easing measures, potentially capping gains in BTC and other risk assets. Analysts warn that the sharp rise in inflation expectations could become self-fulfilling, making it challenging for the Fed to signal easing. 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 rate hike by the Bank of Japan in June. In the crypto market, sustained ETF inflows are crucial for supporting spot BTC prices, and coordinated efforts to mitigate the impact of the KelpDAO exploit have helped DeFi tokens hold up relatively well.
The CoinDesk DeFi Select Index saw a 0.5% gain over 24 hours, outperforming the broader market. Bitcoin's hourly price chart shows a dive out of an ascending trendline, with prices trading below their 50- and 200-hour averages, indicating potential for a deeper price pullback.