Bitcoin Sees Uptick as Tech Earnings Boost Market Sentiment, Short-Term Challenges Persist

This excerpt is from CoinDesk's 'Daybook' newsletter. Subscribe now if you haven't already. Bitcoin's price surged to $77,400, mirroring gains in other risk assets following the release of earnings reports from major US tech companies, which helped stabilize the market. The upward momentum was fueled by Apple's earnings report, which, along with those of Google's parent company Alphabet, Microsoft, Meta, and Amazon, demonstrated double-digit revenue growth. Although these reports have bolstered risk assets and crypto, the current rebound is attributed more to relief buying than a conviction that a new rally is underway. According to a note from crypto exchange Mercado Bitcoin, the market is experiencing short-term pressure due to mixed structural factors, including diminished hopes for rate cuts, outflows from ETFs, and increased geopolitical risks. Despite oil price surges and over $400 million in outflows from spot bitcoin ETFs, crypto prices have held steady. The ongoing conflict in Iran and disruptions in the Strait of Hormuz have driven up crude prices, potentially fueling inflation and making central banks less inclined to cut interest rates. This could negatively impact crypto and other risk assets by making cash and bonds more appealing. The Federal Reserve's decision to maintain rates at 3.50% to 3.75%, along with the absence of clear signals for rate cuts, has led to a repricing of policy expectations. As stated by Rony Szuster, head of research at Mercado Bitcoin, 'In the short term, the market is expected to remain volatile and highly reactive to economic data. In the medium term, the structure will depend on the stabilization of institutional flows and the path of global monetary policy.' With Jerome Powell's term as Fed chair ending on May 15 and Kevin Warsh expected to chair the June FOMC meeting, potential volatility looms due to Warsh's inclination towards tightening monetary policy. The crucial test for bitcoin remains at the $80,000 mark. A successful break could attract new buyers, while a failed attempt may trigger selling if leveraged long positions are unwound. For in-depth analysis of today's altcoin and derivatives activity, refer to Crypto Markets Today. A comprehensive list of this week's events can be found in CoinDesk's 'Crypto Week Ahead'. Current trends and today's signal indicate that the weekly plot of the bitcoin price is testing the $80,000 resistance zone, with the RSI showing early signs of a bullish divergence, although this remains unconfirmed on a weekly close. Failure to break above this level could keep the price range-bound between the 200-day exponential moving average of about $68,000 and the $80,000 level.