Lack of Conviction in Institutional Bitcoin Positions; CPI and Iran Talks May Bring Clarity

Despite a 7% price increase since Sunday, bitcoin's recovery remains tentative, stalling near $72,000 ahead of significant events like the US inflation report and US-Iran talks. Institutions are adopting a cautious stance, reflected in the options market where they are buying calls to bet on price increases, 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, on Deribit, the $80,000 call is the most popular bet, yet demand for puts persists, as shown by a negative options skew across all time frames. The upcoming US consumer price index is expected to show a significant increase in annualized inflation, primarily driven by rising energy prices due to the Iran war. If the core figure exceeds the estimated 2.7% annualized increase, it could lead to further Federal Reserve rate hikes, potentially impacting risk assets like bitcoin. The meeting between Iranian and US delegates in Pakistan may also influence financial market stability, with a potential end to the war and normalization of oil 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 recent decrease, indicating calmer bond markets and a positive signal for crypto bulls.