Lack of Conviction in Institutions' Bitcoin Positioning May Be Addressed by Upcoming CPI and Iran Talks

Despite a 7% rally in bitcoin's price since Sunday to $70,975.01, conviction remains weak due to the recovery stalling near $72,000 ahead of key binary risks, including the U.S. inflation report on Friday and U.S.-Iran truce talks over the weekend. Institutions are adopting a cautious approach, evident in the options market where they are buying calls to bet on gains while also purchasing puts for downside protection. The demand for puts persists, as seen in options skew, indicating a lingering bias for put options. The U.S. consumer price index for March is expected to show a significant increase in annualized inflation, primarily driven by rising energy prices, which may lead to volatility if the core figure exceeds estimates. The meeting between Iranian and U.S. delegates in Pakistan over the weekend will also 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 bitcoin's rally. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in U.S. Treasury futures, has shown a decline in uncertainty around inflation, interest rates, and macro shocks, indicating a calm bond market and a positive signal for crypto bulls.