Lack of Conviction in Institutions' Bitcoin Positioning; CPI and Iran Talks May Bring Clarity

Although bitcoin's price has surged nearly 7% since Sunday to $74,544.30, the 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 stance, as seen in the options market where they are purchasing calls to bet on potential gains while also buying puts for downside protection. According to QCP Capital, options for BlackRock's spot bitcoin ETF show demand for the $45 call expiring in May, indicating an expected price rise. Similarly, bitcoin options on Deribit have seen significant interest in the $80,000 call. However, the persistent demand for puts, which offer protection against declines, is also notable. The US consumer price index for March is expected to show a significant increase in annualized inflation, primarily driven by rising energy prices. This could lead to market volatility, especially if the core figure exceeds the estimated 2.7% annualized rate, potentially supporting the case for Fed rate increases and impacting risk assets like bitcoin. The upcoming meeting between Iranian and US delegates in Pakistan 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 recently shown a decline in turbulence, indicating calmer conditions in the global finance and collateral and credit creation, which could be a positive signal for crypto bulls.