Bitcoin Rebounds 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 rose to $77,400, mirroring the upward trend of other risk assets following 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 Google's parent company Alphabet, Microsoft, Meta, and Amazon, showcased double-digit revenue growth. These reports contributed to a rise in risk assets as renewed faith in AI growth drew investors back to equities and crypto, although the current bounce is attributed more to relief buying than to a conviction that a new rally has begun. According to a note shared with CoinDesk by crypto exchange Mercado Bitcoin, the market is experiencing 'short-term pressure with mixed structural factors,' including diminished hopes for rate cuts, outflows from ETFs, and increased geopolitical risk. Despite oil prices surging and spot bitcoin ETFs seeing outflows of over $400 million as April concluded, crypto prices remained steady. 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's decision to maintain rates between 3.50% and 3.75%, with four dissenting voices being the most since 1992, led markets to reassess policy expectations, as noted by Mercado Bitcoin. The company's head of research, Rony Szuster, stated, '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 path 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, which could introduce volatility due to Warsh's preference for tightening monetary policy, the key test for bitcoin remains at the $80,000 level. Breaking through this level 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, and for a comprehensive list of this week's events, refer to CoinDesk's Crypto Week Ahead. Currently trending is the weekly bitcoin price testing resistance at the $80,000 zone, with the RSI indicating early signs of a bullish divergence, though this remains 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 the $80,000 level.