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

Despite a 7% price increase since Sunday, bitcoin's recovery remains uncertain, stalling near $72,000 ahead of key events like the US inflation report and US-Iran talks. Institutions are adopting a cautious approach, evident in the options market where they are buying calls while also seeking downside protection through puts. 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 rise above $40. Similarly, the $80,000 call is the most popular bet on Deribit. However, the demand for puts persists, revealing a lingering bias for downside protection. The US consumer price index for March is expected to show a significant increase in annualized inflation, primarily driven by rising energy prices due to the Iran war. Markets may experience volatility if the core figure exceeds the estimated 2.7% annualized rate, potentially leading to further Fed rate increases and weighing on risk assets like bitcoin. The meeting between Iranian and US delegates in Pakistan may bring stability to financial markets, potentially accelerating bitcoin's rally if they can end the war and normalize oil traffic. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in US Treasury futures, has shown sharp spikes indicating rising uncertainty around inflation, interest rates, or macro shocks. After rising to 115% in March, the index dropped back to 74% this month, signaling calm in the bond market and a positive sign for crypto bulls.