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

This excerpt is from CoinDesk's 'Daybook' newsletter. Subscribe now to stay updated. Bitcoin reached $77,400, rising with other high-risk assets after the release of earnings reports from major US tech companies, which helped stabilize the market. The gains followed Apple's earnings report, which, along with those of other tech giants like Alphabet, Microsoft, Meta, and Amazon, showed double-digit revenue growth. These reports boosted risk assets and crypto, driven by renewed confidence in AI growth, although the current bounce is attributed to relief buying rather than a new rally. According to crypto exchange Mercado Bitcoin, the market faces short-term pressure due to mixed structural factors, including lower expectations for rate cuts, ETF outflows, and increased geopolitical risk. Despite oil price surges and over $400 million in outflows from spot bitcoin ETFs, crypto prices remained stable. Oil prices, influenced by the Iran conflict and Strait of Hormuz disruption, could fuel inflation, making central banks less likely to cut interest rates, which would negatively impact crypto and other risk assets. The Federal Reserve's decision to maintain rates at 3.50% to 3.75%, with four dissenting voices, led to a repricing of policy expectations. Mercado Bitcoin's head of research, Rony Szuster, noted that the market should remain volatile in the short term and highly reactive to economic data. The key test for bitcoin remains at $80,000, with a potential break drawing in new buyers or a failed move triggering selling. With Jerome Powell's term ending on May 15 and Kevin Warsh expected to chair the June FOMC meeting, volatility is anticipated due to Warsh's preference for tightening monetary policy. The weekly bitcoin price plot is testing resistance at $80,000, with the RSI showing early signs of a bullish divergence, though unconfirmed on a weekly close. A failure to break above this level keeps the price range-bound between the 200-day exponential moving average of about $68,000 and $80,000.