After reaching $80,890.50, Bitcoin retreated to $76,500 following a brief surge above $79,000, halting its ascent from late March's low of under $65,000. However, recent economic data suggests that a rapid recovery may not be imminent. The University of Michigan's Survey of Consumers revealed a record-low consumer sentiment index of 49.8, primarily driven by inflation concerns related to the Iran conflict.
Inflation expectations have also increased significantly, 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 implement interest-rate cuts or liquidity easing, potentially capping the upside or slowing gains in Bitcoin and other risk assets.
Analysts warn that the sharp rise in long-term expectations 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 anticipating a potential Bank of Japan rate increase in June. In the crypto market, sustained ETF inflows are crucial for supporting Bitcoin's price, and coordinated industry efforts have helped DeFi tokens perform relatively well despite the KelpDAO exploit. Bitcoin's price has broken out of an ascending trendline, and its current trading price is below its 50- and 200-hour averages, indicating potential for a deeper price pullback.