After reaching highs of over $79,000, bitcoin has retreated to $76,500, halting its upward momentum from late March's lows below $65,000. Those anticipating a rapid recovery should note that recent economic data does not support a significant bullish surge. 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 increased, with the one-year gauge rising to 4.8% in April, up 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 for bitcoin and other risk assets. Analysts warn that the long-term expectations shift is particularly concerning for the Fed, as it could 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 anticipating a potential rate increase by the Bank of Japan 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 despite the KelpDAO exploit. The CoinDesk DeFi Select Index gained 0.5% over 24 hours, outperforming the broader market.
Bitcoin's hourly price swings have broken out of an ascending trendline, and prices are trading below their 50- and 200-hour averages, indicating uptrend exhaustion and potential for a deeper price pullback.