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

Despite bitcoin's recent 7% price surge to $70,846.05, its recovery has stalled near $72,000 due to key risks, including the upcoming US inflation report and US-Iran negotiations. Institutions are adopting a cautious approach, evident in the options market where they are buying calls while also seeking protection against potential declines. Demand for calls, which allow traders to bet on price gains, remains strong, with a notable interest in the $80,000 call option. However, the persistent demand for puts, which offer protection against price drops, indicates a lingering bias towards downside protection. The US consumer price index is expected to show a significant increase in annualized inflation, primarily driven by rising energy prices. The outcome of the US-Iran talks and the CPI report may bring much-needed clarity to the market, potentially impacting the price of bitcoin and other risk assets. The volatility in US Treasury futures, as reflected in the ICE BofA US Bond Market Option Volatility Estimate Index, also warrants attention, as increased turbulence in US bonds can coincide with tighter financial conditions and a broader risk-off sentiment.