Bitcoin Surges as Tech Earnings Boost Sentiment, but Near-Term Challenges Persist

This excerpt is from CoinDesk's 'Daybook' newsletter. Subscribe now if you haven't already. Bitcoin reached $77,400, rebounding alongside other risk assets after major US tech companies' earnings reports stabilized the market. The gains followed Apple's earnings report, which, along with peers like Alphabet, Microsoft, Meta, and Amazon, demonstrated double-digit revenue growth. These reports lifted risk assets, driven by renewed confidence in AI growth, although the current upswing is attributed more to relief buying than the start of a new rally. According to crypto exchange Mercado Bitcoin, the market faces 'short-term pressure with mixed structural factors,' including decreased hopes for rate cuts, ETF outflows, and higher geopolitical risks. 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, could fuel inflation, making central banks less inclined to cut interest rates, which might negatively impact crypto and other risk assets by making cash and bonds more appealing. The Federal Reserve maintained its rate at 3.50% to 3.75%, with four dissenting votes, 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 term as Fed chair ending on May 15 and Kevin Warsh expected to lead the June FOMC meeting, volatility is anticipated due to Warsh's preference for tightening monetary policy. The crucial test for bitcoin remains at $80,000; breaking this level could attract new buyers, while a failed attempt may trigger selling. Key trends and signals include the weekly bitcoin price testing rejection at the $80,000 resistance zone, with the RSI showing early signs of a bullish divergence, though unconfirmed on a weekly close.