Bitcoin Rallies as Tech Giants' Earnings Boost Market Sentiment, Despite Lingering Short-Term Pressures

This excerpt is from CoinDesk's 'Daybook' newsletter. Subscribe here if you haven't done so already. Bitcoin surged to $77,400, rising in tandem with 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 joined those of its peers, including Alphabet, Microsoft, Meta, and Amazon, in showcasing double-digit revenue growth earlier in the week. These earnings reports bolstered risk assets as renewed confidence in AI growth drew investors back to equities and crypto, although the current rebound appears to be driven by relief buying rather than a conviction that a new rally is underway. According to a note shared with CoinDesk by crypto exchange Mercado Bitcoin, the market is experiencing 'short-term pressure with still-mixed structural factors,' including reduced hopes for rate cuts, ETF outflows, and increased geopolitical risk. Despite oil prices surging and spot bitcoin ETFs witnessing outflows of over $400 million as April drew to a close, crypto prices remained steady this week. Oil prices remain a crucial factor, as higher crude prices stemming from the Iran conflict and disruptions in the Strait of Hormuz could fuel inflation, making central banks less inclined to cut interest rates, which in turn 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 the 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 remains dependent on the stabilization of institutional flows and the path of global monetary policy.' With Jerome Powell's chairmanship at the Fed set to end on May 15 and Kevin Warsh expected to chair the June FOMC meeting, which may induce volatility given Warsh's preference for tightening monetary policy, the key test for bitcoin remains at $80,000. A break above this level 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 events this week, see CoinDesk's 'Crypto Week Ahead.' The weekly plot of the bitcoin price is currently testing resistance at the $80,000 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 may keep the price range-bound between the 200-day exponential moving average of about $68,000 and the $80,000 level.