Lack of Conviction in Institutional Bitcoin Positions; CPI and Iran Talks May Provide Clarity

Although bitcoin's price has surged nearly 7% since Sunday to $71,280.84, the recovery has stalled near $72,000 due to key binary risks, including Friday's US inflation report and US-Iran truce talks. Institutions are adopting a cautious stance, chasing upside via calls while also buying downside protection. Demand for calls is evident, with the $80,000 call being a popular bet, but the demand for puts persists, indicating a lingering bias for downside protection. The US consumer price index for March is expected to show a significant increase in annualized inflation, led by rising energy prices. The outcome of the US-Iran talks may also impact financial market stability, with a potential end to the war and normalization of oil tanker traffic through the Strait of Hormuz likely to accelerate bitcoin's rally. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in US Treasury futures, has shown a decrease in turbulence, potentially signaling a green light for crypto bulls.