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

Despite a 7% price surge since Sunday, bitcoin's recovery has stalled near $72,000 due to key binary risks, including the upcoming US inflation report and US-Iran truce talks. Institutions are adopting a cautious strategy, chasing upside potential through call options while buying downside protection. Demand for calls is evident, with a $80,000 call emerging as a popular bet, but the persistent demand for puts, which offer protection against declines, indicates a lingering bias for downside protection. The US consumer price index for March is expected to show a significant increase in annualized inflation, led by rising energy prices, which may lead to market volatility. The outcome of the US-Iran talks may also impact 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 US Treasury futures, has dropped back to 74% after a sharp spike in March, indicating calmer conditions in the bond market and a positive signal for crypto bulls.