After reaching above $79,000, Bitcoin pulled back to $76,500, pausing its rally from late March's low of under $65,000. However, recent economic data suggests that a swift resurgence may not be imminent. The University of Michigan's Consumer Sentiment Index dropped to a record low of 49.8, driven by inflation concerns related to the Iran conflict. Inflation expectations have also risen significantly, with the one-year gauge increasing to 4.8% 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, potentially capping Bitcoin's upside. Analysts note that the Fed closely monitors inflation expectations, and the recent increase may make it more challenging for the central bank to signal easing in the near term.
The Federal Reserve is expected to maintain its benchmark interest rate between 3.5% and 3.75% this Wednesday. Meanwhile, traders anticipate a potential rate increase by the Bank of Japan in June.
In the crypto market, sustained ETF inflows are crucial for supporting Bitcoin's price on dips. Coordinated efforts to mitigate the impact of the KelpDAO exploit have helped DeFi tokens perform relatively better than the broader market.
The CoinDesk DeFi Select Index saw a 0.5% gain over 24 hours, while the CoinDesk 20 declined by 1.5%. Bitcoin's price has broken out of an ascending trendline, and its prices are trading below their 50- and 200-hour averages, indicating potential uptrend exhaustion and a deeper price pullback.