Weekly Bitcoin Outlook: Two Months of Decline and Two Months of Rise, What's Next?

- Overcoming macro headwinds and geopolitical tensions challenge the rise in Bitcoin's price:

Bitcoin continued its correction mid-week, closing below $76,000 on Wednesday. This price decline came amid hawkish Federal Reserve signals and political deadlock between the US and Iran, favoring dollar bulls and limiting gains in risk-sensitive assets like Bitcoin.

The Federal Reserve decided to keep interest rates unchanged within the 3.50% to 3.75% range at its meeting held on Wednesday in April, as widely expected by market participants. Notably, this decision saw the highest opposition since 1992, with three policymakers voting against the dovish stance in the monetary policy statement, while another member opposed a rate cut.

In the press conference following the meeting, Federal Reserve Chair Jerome Powell, who is ending his term, explained that the discussion was about the tone of the message, not about the need to raise interest rates. However, traders sharply reduced their bets on any additional easing by the Fed in 2026, now seeing over a 10% chance of a rate hike by December, according to the CME FedWatch tool.

This decision comes amid a surge in energy prices driven by the war, fueling inflation fears amid stalled US-Iran peace talks. Uncertainty over the second round of Middle East negotiations has become a short-term factor limiting the momentum of high-risk assets, as geopolitical risks continue to negatively impact investor sentiment across markets.

Nevertheless, the US tech giants' earnings report on Thursday slightly supported the crypto markets, with Bitcoin experiencing a modest rebound. By Friday, Bitcoin continued its rise above $77,000.

- Where is Bitcoin heading in May?

Bitcoin ended April higher, continuing its gains by over 11%, building on the modest positive return in March. Monthly trends indicate continued optimism. Historically, Bitcoin has posted positive returns in May, with an average gain of 7.66%.

This recovery hypothesis will play a role if institutional inflows persist, regulatory developments (such as the clarity law) turn supportive of the broader crypto market, and the Middle East conflict ends, potentially restoring investor confidence and risk appetite.

Bitcoin Monthly Return Chart (%). Source: CoinGlass.
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