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

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. Gains were fueled by Apple's earnings report, which, along with those of Google's parent company Alphabet, Microsoft, Meta, and Amazon, showcased double-digit revenue growth, thereby enhancing industry sentiment. The earnings reports led to an increase in risk assets as renewed confidence in AI growth drew investors back to equities and crypto. However, the current bounce is attributed to relief buying rather than a firm belief in the start of a new rally. According to 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 heightened geopolitical risk. Crypto prices remained steady this week despite oil prices surging and spot bitcoin ETFs witnessing outflows of over $400 million as April drew to a close. Oil prices remain a crucial factor, as higher crude prices stemming from the Iran conflict and disruptions in the Strait of Hormuz could exacerbate 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% this week, with four dissenting votes, 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 markets. According to Rony Szuster, the company's head of research, 'In the short term, the market is expected to remain volatile and highly sensitive to economic data. In the medium term, the structure will depend on the stabilization of institutional flows and the trajectory of global monetary policy.' With Jerome Powell's chairmanship at the Fed ending on May 15 and Kevin Warsh expected to chair the June FOMC meeting, volatility may ensue due to Warsh's preference for tightening monetary policy. The key challenge lies at the $80,000 mark. A breakthrough could attract new buyers, while a failed attempt may trigger selling if leveraged long positions are unwound. Remain cautious! For more analysis of today's altcoin and derivatives activity, see Crypto Markets Today. For a comprehensive list of events this week, refer to CoinDesk's 'Crypto Week Ahead.' Current trends Today's signal The weekly bitcoin price chart is testing resistance at the $80,000 zone, with the RSI showing early signs of a bullish divergence – the price has printed a lower low while the RSI has held higher, though this remains unconfirmed on a weekly close. Failure to break above this level will keep the price range-bound between the 200-day exponential moving average of approximately $68,000 and the $80,000 level.