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

This excerpt is from CoinDesk's 'Daybook' newsletter. Subscribe here if you haven't already. Bitcoin rose to $77,400, rebounding with other high-risk assets following the release of earnings reports from major US tech companies, which helped stabilize the markets. The increase came after Apple, along with its peers, including Alphabet, Microsoft, Meta, and Amazon, reported double-digit revenue growth, thereby enhancing industry sentiment. Although these earnings reports led to a rise in high-risk assets, as renewed confidence in AI-driven growth drew investors back to equities and crypto, the current upswing is more indicative of relief buying than a strong conviction that a new rally is underway. According to a note from crypto exchange Mercado Bitcoin shared with CoinDesk, the market is experiencing 'short-term pressure due to mixed structural factors,' including diminished hopes for rate cuts, ETF outflows, and increased geopolitical risks. Despite oil price surges and over $400 million in outflows from spot bitcoin ETFs as April concluded, crypto prices remained stable. Oil prices continue to be a significant factor, as higher crude prices stemming from the Iran conflict and disruptions in the Strait of Hormuz could fuel inflation, making central banks less likely to cut interest rates. This scenario could negatively impact crypto and other high-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 a repricing of policy expectations. 'In the short term, the market is expected to remain volatile and highly responsive to economic data,' said 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 term as Fed chair ending on May 15 and Kevin Warsh expected to chair the June FOMC meeting, which may induce volatility given Warsh's preference for tightening monetary policy, the key test for bitcoin remains at the $80,000 level. A successful break above this level could attract new buyers, while a failed attempt may trigger selling if leveraged long positions are unwound. For analysis of today's altcoin and derivatives activity, see Crypto Markets Today, and for a comprehensive list of this week's events, refer to CoinDesk's 'Crypto Week Ahead.' Currently trending: the weekly bitcoin price chart is testing resistance at $80,000, with the RSI showing early signs of a bullish divergence, although this remains 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 the $80,000 level.