After reaching nearly $79,000, bitcoin has retreated to $76,500, halting its surge from late March's low of under $65,000. Those anticipating a quick recovery should note that recent economic data does not support a significant bullish movement. The University of Michigan's Consumer Sentiment Index has dropped to a record low of 49.8, primarily driven 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 signal interest-rate cuts, potentially capping the upside or slowing gains in bitcoin and other risk assets. Analysts warn that the long-term expectations shift is particularly concerning for the Fed, as it may indicate that inflation psychology is becoming unanchored.
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 bitcoin prices, 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 broken out of an ascending trendline, and prices are trading at a discount to their 50- and 200-hour averages, indicating uptrend exhaustion and potential for a deeper price pullback.