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

This excerpt is from the CoinDesk 'Daybook' newsletter. Subscribe now if you haven't already. Bitcoin reached $77,400, rebounding along with other risk assets after major US tech companies' earnings reports stabilized the market. The gains followed Apple's earnings report, which, along with those of Google's parent company Alphabet, Microsoft, Meta, and Amazon, showed double-digit revenue growth. These reports bolstered risk assets and crypto as renewed confidence in AI growth drew investors back in, though the current bounce is more indicative of relief buying than a new rally. According to crypto exchange Mercado Bitcoin, the market is experiencing 'short-term pressure with mixed structural factors,' including reduced 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 held steady. Oil prices, influenced by the Iran conflict and disruptions in the Strait of Hormuz, could fuel inflation, making central banks less likely to cut interest rates and potentially weighing on crypto and other risk assets. The Federal Reserve maintained rates at 3.50% to 3.75%, with four dissenting votes, 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, reacting highly to economic data,' said Rony Szuster, the company's head of research. 'In the medium term, the structure depends on the stabilization of institutional flows and the path of global monetary policy.' With Jerome Powell's term ending on May 15 and Kevin Warsh expected to chair the June FOMC meeting, volatility may increase due to Warsh's preference for tighter monetary policy. The key challenge remains at $80,000; breaking through could attract new buyers, while a failed attempt may trigger selling if leveraged long positions are unwound. The weekly bitcoin price chart is testing resistance at $80,000, with the RSI showing early signs of a bullish divergence, though this is 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 $80,000.