This excerpt is taken from the CoinDesk newsletter 'Daybook.' To stay updated, sign up here if you haven't already. Bitcoin's price surged to $77,400, rebounding alongside other risk assets following the release of earnings reports from major US tech companies, which helped to stabilize the markets.
The gains were fueled by Apple's earnings report, which, along with those of its peers including Alphabet, Microsoft, Meta, and Amazon, showcased double-digit revenue growth. This renewed confidence in the AI growth story drew investors back into equities and crypto, although the current bounce is attributed more to relief buying than a conviction that a new rally has begun.
According to a note from crypto exchange Mercado Bitcoin, the market is facing '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 over $400 million in outflows from spot bitcoin ETFs as April concluded, crypto prices have held steady.
The ongoing conflict in Iran and disruptions in the Strait of Hormuz, leading to higher crude prices, could exacerbate inflation. This, in turn, might make central banks less inclined to cut interest rates, potentially impacting 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, has led markets to reassess policy expectations.
The head of research at Mercado Bitcoin, Rony Szuster, noted, '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 term as Fed chairman 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 challenge remains at the $80,000 level.
A successful break could attract new buyers, while a failed attempt may trigger selling if leveraged long positions are unwound. For in-depth analysis of today's altcoin and derivatives activity, refer to Crypto Markets Today, and for a comprehensive list of this week's events, see 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 surpass this level could keep the price range-bound between the 200-day exponential moving average of about $68,000 and the $80,000 level.