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

Despite bitcoin's recent 7% price surge to $72,302.81, market conviction remains weak, with the recovery faltering near $72,000 ahead of key risk events, including the upcoming US inflation report and US-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 seeking downside protection through puts. The demand for $80,000 calls on Deribit and $45 calls on BlackRock's spot bitcoin ETF suggests traders expect prices to rise, but the persistent demand for puts indicates a lingering bias towards protection against declines. The US 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 market volatility if the core figure exceeds estimates. The outcome of the US-Iran talks may also impact financial market stability and potentially influence bitcoin's rally. Additionally, the ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in US Treasury futures, has shown a decline in uncertainty, indicating calmer conditions in the bond market, which could be a positive signal for crypto bulls.