This excerpt is from CoinDesk's 'Daybook' newsletter. Subscribe here if you haven't already. Bitcoin surged to $77,400, rising alongside other risk assets following the release of earnings reports from major US tech companies, which helped stabilize the markets.
The gains followed Apple's earnings report, which, along with those of Alphabet, Microsoft, Meta, and Amazon, showed double-digit revenue growth, enhancing industry sentiment. These reports boosted risk assets as renewed confidence in AI growth drew investors back to equities and crypto, although the current bounce is attributed more to relief buying than the conviction that a new rally is underway. According to a note from crypto exchange Mercado Bitcoin shared with CoinDesk, the market is experiencing 'short-term pressure amidst mixed structural factors,' including diminished hopes for rate cuts, ETF outflows, and heightened geopolitical risk. Despite oil price surges and over $400 million in outflows from spot bitcoin ETFs as April ended, crypto prices remained steady.
Oil prices, influenced by the Iran conflict and disruptions in the Strait of Hormuz, could fuel inflation, making central banks less inclined to cut interest rates, which could negatively impact crypto and other risk assets by making cash and bonds more appealing. The Federal Reserve maintained interest rates at 3.50% to 3.75%, with four dissenting voices, the most since 1992.
Mercado Bitcoin noted that the decision and lack of clear rate-cut signals led to a repricing of policy expectations. 'In the short term, the market is expected to remain volatile and highly reactive to economic data,' said Rony Szuster, the company's head of research. 'In the medium term, the structure remains dependent 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, which could introduce volatility given Warsh's preference for tightening monetary policy, the key test for bitcoin remains at $80,000.
A breakthrough could attract new buyers, while a failed attempt may trigger selling if leveraged long positions are unwound. For analysis of today's activity in altcoins and derivatives, see Crypto Markets Today, and for a comprehensive list of this week's events, refer to CoinDesk's 'Crypto Week Ahead.' The weekly bitcoin price chart is testing resistance at $80,000, with the RSI showing early signs of a bullish divergence, though this remains unconfirmed on a weekly close. Failure to break above this level keeps the price range-bound between the 200-day exponential moving average of about $68,000 and the $80,000 level.