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

Despite a 7% increase in bitcoin's price since Sunday, conviction remains elusive, with the recovery faltering near $72,000 ahead of key events such as Friday's US inflation report and US-Iran talks. Institutions are adopting a cautious strategy, buying call options to speculate on potential gains while also purchasing put options to protect against losses. According to QCP Capital, there is demand for the $45 call expiring in May for BlackRock's spot bitcoin ETF, indicating expectations of a price rise above the current $40. Similarly, bitcoin options on Deribit have seen significant interest in the $80,000 call. However, the persistent demand for puts, which offer protection against declines, suggests a lingering bias towards caution. 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, potentially supporting the case for Fed rate increases and weighing on risk assets such as bitcoin. The outcome of the US-Iran talks in Pakistan will also be crucial, as a resolution to the conflict could lead to increased stability in financial markets and 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 uncertainty, indicating calmer conditions in the bond market and a positive signal for crypto bulls.