Institutions Lack Conviction in Bitcoin Despite Price Rally

The recent 7% surge in bitcoin's price to $70,803.44 has not been enough to instill conviction, with the recovery faltering near $72,000 ahead of key events such as the US inflation report and US-Iran talks. Institutions are adopting a cautious approach, buying call options to bet on price gains while also purchasing downside protection. According to QCP Capital, there is demand for the $45 call expiring in May on BlackRock's spot bitcoin ETF, indicating expectations of a price rise above $40. Similarly, the $80,000 call is the most popular bet on Deribit. However, the demand for puts, which offer protection against declines, persists, as evident in the options skew, which remains negative across all time frames. The US consumer price index for March is expected to show a significant increase in annualized inflation, led by rising energy prices. This could lead to volatility if the core figure exceeds the estimated 2.7% annualized rate, potentially impacting risk assets like bitcoin. The meeting between Iranian and US delegates in Pakistan is also crucial for financial market stability, and a positive outcome could accelerate bitcoin's rally. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in US Treasury futures, has shown a decline in turbulence, indicating calmer conditions for crypto bulls.