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

This excerpt is from CoinDesk's 'Daybook' newsletter. Subscribe here for more insights. 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. The recent gains were driven by improved industry sentiment, particularly after Apple joined its peers in reporting double-digit revenue growth. Other major companies, including Alphabet, Microsoft, Meta, and Amazon, also reported significant growth earlier in the week. The earnings reports boosted risk assets as renewed confidence in AI growth drew investors back to equities and crypto. However, the current bounce is attributed to relief buying rather than a conviction that a new rally has begun. According to crypto exchange Mercado Bitcoin, the market is experiencing short-term pressure due to mixed structural factors, including reduced hopes for rate cuts, ETF outflows, and increased geopolitical risk. Despite oil price surges and over $400 million in outflows from spot bitcoin ETFs, crypto prices remained stable as April came to a close. The ongoing conflict in Iran and disruptions in the Strait of Hormuz may lead to higher crude prices, fueling inflation and making central banks less likely to cut interest rates. This 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% this week, 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 remains dependent 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, where a break could attract new buyers, while a failed move may trigger selling if leveraged longs unwind. For further 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.