Lack of Conviction in Institutional Bitcoin Positions

The recent 7% surge in bitcoin's price to $75,293.82 has not been accompanied by strong conviction, with the recovery faltering near $72,000 ahead of key risk events, including the upcoming US inflation report and US-Iran talks. Institutions are adopting a cautious approach, reflected in the options market where they are purchasing calls to bet on potential gains while also buying downside protection. According to QCP Capital, options for BlackRock's spot bitcoin ETF show demand for the $45 call expiring in May, indicating expectations of a price 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, is also evident in options skew, which remains negative across all time frames, indicating a lingering bias towards put options. The US consumer price index for March is expected to show a marked increase in annualized inflation, primarily driven by rising energy prices, which could potentially lead to market volatility if the core figure exceeds estimates. The meeting between Iranian and US delegates in Pakistan also holds significant implications for 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 shown a decrease in turbulence, indicating calmer conditions in the bond market, a positive sign for crypto bulls.