Lack of Conviction in Institutions' Bitcoin Positioning; CPI and Iran Talks May Provide Clarity

Despite a 7% rally in bitcoin's price since Sunday, conviction remains weak due to the recovery stalling near $72,000 ahead of key events such as Friday's US inflation report and US-Iran truce talks. Institutions are adopting a cautious approach, as seen in the options market where they are buying calls while also seeking downside protection through puts. According to QCP Capital, options tied to BlackRock's spot bitcoin ETF show demand for the $45 call expiring in May, while bitcoin options on Deribit have seen similar flows with the $80,000 call emerging as the most popular bet. However, demand for puts persists, indicating 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. This may lead to volatility if the core figure exceeds the estimated 2.7% annualized rate, potentially weighing on risk assets like bitcoin. The upcoming 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.