Bitcoin Sees Uptick as Tech Earnings Boost Market Sentiment, Short-Term Challenges Persist

This excerpt is from the CoinDesk 'Daybook' newsletter. Subscribe here if you haven't done so already. Bitcoin reached $77,400, rebounding alongside other risk assets following the release of earnings reports from major US tech companies, which helped stabilize the market. Gains were observed after Apple, along with other industry peers including Alphabet, Microsoft, Meta, and Amazon, reported earnings that showcased double-digit revenue growth, thus enhancing market sentiment. The earnings reports contributed to a rise in risk assets as renewed confidence in AI growth drew investors back into equities and crypto. However, the current bounce is attributed more to relief buying than a firm conviction that a new rally has commenced. According to a note shared with CoinDesk by crypto exchange Mercado Bitcoin, the market is experiencing 'short-term pressure due to mixed structural factors,' including diminished hopes for rate cuts, outflows from ETFs, and heightened geopolitical risks. Crypto prices remained steady this week despite oil price surges and over $400 million in outflows from spot bitcoin ETFs as April drew to a close. Oil prices are a significant factor, with higher crude prices resulting from the Iran conflict and disruptions in the Strait of Hormuz potentially fueling inflation. This could make central banks less inclined to cut interest rates, thereby impacting crypto and other risk assets by making cash and bonds more appealing. The Federal Reserve maintained interest rates at 3.50% to 3.75% this week, with four dissenting voices - the most since 1992. Mercado Bitcoin noted that the decision and lack of clear signals for rate cuts led to markets repricing policy expectations. 'In the short term, the market is expected to remain volatile and highly responsive to economic data,' stated Rony Szuster, the company's head of research. '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 may arise given Warsh's preference for tightening monetary policy. The key challenge lies 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. Remain vigilant! For further analysis of today's altcoin and derivatives activity, see Crypto Markets Today. For a comprehensive list of this week's events, refer to CoinDesk's 'Crypto Week Ahead.' Current trends Today's signal The weekly bitcoin price chart is testing resistance at the $80,000 zone, with the RSI indicating early signs of a bullish divergence - the price recorded a lower low while the RSI remained higher - though this is unconfirmed on a weekly close. Failure to break above this level would keep the price range-bound between the 200-day exponential moving average of approximately $68,000 and that level.