Bitcoin Rebounds as Strong Earnings from Tech Giants Boost Investor Sentiment

This excerpt is from CoinDesk's 'Daybook' newsletter. To stay updated, sign up here. Bitcoin surged to $77,400, mirroring the upward trend of other risk assets following the release of promising earnings reports from major US tech companies, which helped stabilize the markets. The gains were preceded by 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 bolstered risk assets by reigniting confidence in the AI growth narrative, drawing investors back to equities and crypto. However, the current bounce is attributed more to relief buying than the conviction that a new rally has commenced. According to a note from crypto exchange Mercado Bitcoin shared with CoinDesk, the market is experiencing 'short-term pressure amidst mixed structural factors,' including diminished hopes for rate cuts, outflows from ETFs, and heightened geopolitical risks. Despite oil prices surging and spot bitcoin ETFs witnessing outflows exceeding $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 maintained interest rates at 3.50% to 3.75%, with four dissenting voices, the most since 1992. Mercado Bitcoin noted that the decision, coupled with the lack of clear signals for rate cuts, led to markets repricing policy expectations. Rony Szuster, the company's head of research, 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 trajectory 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, potential volatility is anticipated due to Warsh's preference for tightening monetary policy. The crucial test for bitcoin remains at the $80,000 mark. 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, visit CoinDesk's Crypto Week Ahead. Current trends and today's signal indicate the weekly bitcoin price is testing resistance at $80,000, with the RSI showing early signs of a bullish divergence, though this remains unconfirmed pending a weekly close. Failure to break above this level could keep the price within the range bounded by the 200-day exponential moving average of about $68,000 and the $80,000 level.