Bitcoin Surges as Tech Giants' Earnings Boost Market Sentiment, Short-Term Challenges Persist

This excerpt is from CoinDesk's 'Daybook' newsletter. Subscribe here if you haven't already. Bitcoin rose to $77,400, rebounding 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 Google's parent company Alphabet, Microsoft, Meta, and Amazon, showcased double-digit revenue growth. These reports bolstered risk assets as renewed confidence in AI growth drew investors back to equities and crypto. However, the current bounce is attributed more to relief buying than a conviction that a new rally has begun. According to crypto exchange Mercado Bitcoin, the market is experiencing 'short-term pressure due to mixed structural factors,' including diminished hopes for rate cuts, ETF outflows, and heightened geopolitical risk. Despite oil prices surging and over $400 million in outflows from spot bitcoin ETFs as April concluded, crypto prices remained stable. 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. This scenario 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 signals for rate cuts 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 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 may arise due to Warsh's preference for tightening monetary policy. The crucial test for bitcoin remains at the $80,000 level. A breakthrough could attract new buyers, while a failed attempt may trigger selling if leveraged long positions are unwound. For analysis of today's altcoin and derivatives activity, see Crypto Markets Today. 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 the $80,000 zone, with the RSI showing early signs of a bullish divergence, though this remains unconfirmed on a weekly close. Failure to break above this level may keep the price range-bound between the 200-day exponential moving average of about $68,000 and the $80,000 level.