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

This excerpt is from CoinDesk's 'Daybook' newsletter. To subscribe, click here. 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 market. Gains were fueled by Apple's earnings report, which, along with those of Alphabet, Microsoft, Meta, and Amazon, demonstrated double-digit revenue growth. Although the earnings reports boosted risk assets and crypto due to renewed confidence in AI growth, the current bounce is attributed to relief buying rather than a conviction that a new rally has begun. According to 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 steady. Oil prices, influenced by the Iran conflict and disruptions in the Strait of Hormuz, could contribute to inflation, making central banks less likely to cut interest rates and potentially weighing on crypto and risk assets. The Federal Reserve maintained interest rates at 3.50% to 3.75%, with four dissenting voices, the most since 1992. The decision and lack of clear rate-cut signals led to a repricing of policy expectations. Rony Szuster, head of research at Mercado Bitcoin, 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. 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 rejection at the $80,000 resistance zone, with the RSI showing early signs of a bullish divergence, though unconfirmed on a weekly close. Failure to break above may keep the price range-bound between the 200-day exponential moving average of about $68,000 and that level.