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

Although bitcoin's price has surged nearly 7% since Sunday to $71,126.42, the recovery has stalled near $72,000 due to key binary risks, including the upcoming US inflation report and US-Iran truce talks. Institutions are adopting a cautious approach, evident in the options market where they are buying calls while also seeking downside protection. QCP Capital reports that options for BlackRock's spot bitcoin ETF show demand for the $45 call expiring in May, indicating expectations of a price increase. Similarly, Deribit's bitcoin options have seen significant interest in the $80,000 call. However, the demand for puts, which offer protection against declines, persists. The 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. The meeting between Iranian and US delegates in Pakistan may also impact financial market stability, with a potential resolution to the war possibly accelerating bitcoin's rally. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in US Treasury futures, has shown sharp spikes in March, indicating rising uncertainty around inflation and interest rates. The index has since dropped, signaling a calm in the bond market and a positive sign for crypto bulls.