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

The price of bitcoin has surged nearly 7% since Sunday to $74,089.02, but its recovery is stalling near $72,000 due to key binary risks, including the upcoming US inflation report and US-Iran truce talks. Institutions are taking a cautious approach, as seen in the options market where they are purchasing call options to bet on potential gains 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 this level. Similarly, bitcoin options on Deribit have seen flows towards the $80,000 call. However, the demand for puts, which offer protection against declines, persists, revealing a lingering bias for put options. The US consumer price index for March is expected to show a significant increase in annualized inflation, primarily due to rising energy prices. This could lead to market volatility, especially if the core figure exceeds the estimated 2.7% annualized rate, potentially weighing on risk assets like bitcoin. The 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 spiked in recent months, indicating rising uncertainty around inflation, interest rates, and macro shocks. However, the index has dropped back to 74% this month, signaling a calm in the world's most important bond market and a positive sign for crypto bulls.