Lack of Conviction in Institutions' Bitcoin Positions; CPI and Iran Talks May Bring Clarity

Despite a 7% surge in bitcoin's price since Sunday, conviction remains limited, with the recovery faltering near $72,000 ahead of key events such as Friday's US inflation report and US-Iran truce talks. Institutions are adopting a cautious approach in the options market, pursuing upside potential through call options while also buying downside protection. According to QCP Capital, options for BlackRock's spot bitcoin ETF show demand for the $45 call expiring in May, indicating expectations of a price rise above the current $40 level. Similarly, bitcoin options on Deribit have seen significant interest in the $80,000 call. However, demand for puts, which offer protection against declines, persists, as reflected in the negative options skew across all time frames. The upcoming US consumer price index for March is expected to show a significant increase in annualized inflation, primarily driven by rising energy prices. This could lead to market volatility, particularly if the core figure exceeds the estimated 2.7% annualized rate, potentially supporting the case for Fed rate increases and weighing on risk assets like BTC. The meeting between Iranian and US delegates in Pakistan over the weekend will be crucial for financial market stability, with a potential end to the war and normalization of oil tanker traffic through the Strait of Hormuz likely to accelerate BTC's rally. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in US Treasury futures, has shown a decrease in uncertainty around inflation, interest rates, and macro shocks, indicating calmer conditions in the world's most important bond market and a positive signal for crypto bulls.