Bitcoin Rallies as Tech Giants' Earnings Boost Market Sentiment, but Short-Term Challenges Persist

This excerpt is from the CoinDesk newsletter 'Daybook.' Subscribe now if you haven't already. Bitcoin surged to $77,400, rebounding alongside other risk assets following the release of earnings reports from major US tech companies, which helped stabilize the markets. The upswing occurred after Apple, along with its peers including Alphabet, Microsoft, Meta, and Amazon, reported earnings that enhanced industry sentiment with double-digit revenue growth. Although the earnings reports fueled a rise in risk assets due to renewed confidence in AI growth, the current bounce appears to be driven by relief buying rather than a conviction that a new rally is underway. According to a note from crypto exchange Mercado Bitcoin, the market is experiencing short-term pressure due to mixed structural factors, including reduced hopes for rate cuts, outflows from ETFs, and increased geopolitical risk. Despite oil price surges and over $400 million in outflows from spot bitcoin ETFs, crypto prices held steady as April drew to a close. The ongoing Iran conflict and disruption in the Strait of Hormuz could lead to higher crude prices, fueling inflation and making central banks less likely to cut interest rates, which could negatively impact crypto and other risk assets by making cash and bonds more attractive. The Federal Reserve maintained interest rates at 3.50% to 3.75%, with four dissenting voices, the most since 1992. Mercado Bitcoin noted that the decision and lack of clear rate-cut signals led to a repricing of policy expectations. The company's head of research, Rony Szuster, stated, 'In the short term, the market is expected to remain volatile and highly reactive 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, volatility may increase due to Warsh's preference for tightening monetary policy. The key test for bitcoin remains at $80,000, and 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 altcoin and derivatives activity, see Crypto Markets Today, and for a comprehensive list of events this week, see CoinDesk's 'Crypto Week Ahead.' Currently trending: the weekly bitcoin price is testing resistance at $80,000, with the RSI showing early signs of a bullish divergence, although 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 $80,000.