Institutions Lack Conviction in Bitcoin Positioning Amid CPI and Iran Talks

The recent 7% rally in bitcoin's price to $73,943.64 has not been accompanied by strong conviction, with the recovery faltering near $72,000 ahead of key risk events, including the US inflation report and US-Iran talks. Institutions are adopting a cautious stance, as seen in the options market, where they are buying calls to speculate on potential gains while also purchasing puts for downside protection. 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 the current $40 level. Similarly, bitcoin options on Deribit have seen significant demand for 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 upcoming US consumer price index for March is expected to show a significant 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 cementing the case for Fed rate increases and weighing on risk assets like bitcoin. The meeting between Iranian and US delegates in Pakistan over the weekend will also be crucial for financial market stability, with a potential resolution to the conflict likely to accelerate bitcoin's rally. The first signs of this could emerge from Hyperliquid-listed oil perpetual futures. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in US Treasury futures, has shown sharp spikes 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 return to calm in the bond market, which could be a positive sign for crypto bulls.