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

The price of bitcoin has rallied nearly 7% since Sunday to $71,878.68, but its recovery has stalled near $72,000 due to key binary risks, including the upcoming U.S. inflation report and U.S.-Iran truce talks. Institutions are adopting a cautious approach, evident in the options market where they are buying calls to bet on potential gains while also purchasing puts for downside protection. According to QCP Capital, there is demand for the $45 call expiring in May for BlackRock's spot bitcoin ETF, indicating an expected price rise above $40. Similarly, the $80,000 call is the most popular bet on Deribit. However, the demand for puts persists, revealing a lingering bias for protection against declines. The U.S. consumer price index for March is expected to show a significant increase in annualized inflation, primarily driven by rising energy prices due to the Iran war. 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 U.S. delegates in Pakistan may also influence 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 sharp spikes indicating rising uncertainty around inflation and interest rates, but has recently dropped back to 74%, signaling calmness in the bond market and a positive sign for crypto bulls.