Lack of Conviction in Institutions' Bitcoin Positions

The recent 7% surge in bitcoin's price to $70,803.44 has not been accompanied by strong conviction, with the recovery faltering near $72,000 ahead of key events such as Friday's US inflation report and US-Iran talks. Institutions are adopting a cautious stance, purchasing call options to bet on potential gains while also buying put options to protect against potential losses. According to QCP Capital, there is demand for the $45 call expiring in May for BlackRock's spot bitcoin ETF, indicating expectations of a price increase. However, the persistent demand for puts and the negative options skew across all time frames suggest a lingering bias towards downside protection. The upcoming US consumer price index report is expected to show a significant increase in annualized inflation, primarily driven by rising energy prices. This could lead to market volatility, particularly if the core figure exceeds the estimated 2.7% annualized rate, potentially weighing on risk assets such as bitcoin. The outcome of the US-Iran talks could also impact financial market stability, with a positive outcome potentially accelerating bitcoin's rally. The current calm in the US bond market, as reflected in the ICE BofA US Bond Market Option Volatility Estimate Index, may be a positive signal for crypto bulls.