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

The bitcoin price, currently at $74,716.62, has seen a nearly 7% increase since Sunday, yet conviction in the market remains low, with the recovery stalling near $72,000 ahead of pivotal events such as Friday's US inflation report and US-Iran truce discussions. Institutions are taking a cautious approach, evident in the options market, where they are pursuing upside potential through call options while also buying downside protection. According to QCP Capital, there is demand for the $45 call expiring in May for BlackRock's spot bitcoin ETF, indicating traders expect the price to rise above the current $40 level. 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, suggests a lingering bias towards put options. The US consumer price index for March is expected to show a substantial 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 supporting the case for Fed rate increases and weighing on risk assets like BTC. The meeting between Iranian and US delegates in Pakistan over the weekend will be crucial for financial market stability, and a positive outcome could accelerate BTC's rally. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in US Treasury futures, has shown a decrease in turbulence, indicating calmer conditions in the bond market and a positive signal for crypto bulls.