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

The price of bitcoin has rallied nearly 7% since Sunday to $75,132.19, but its recovery has stalled near $72,000 due to key binary risks, including the upcoming US inflation report and US-Iran truce talks. Institutions are adopting a cautious approach 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 an expected price rise above $40. Similarly, bitcoin options on Deribit have seen significant demand for the $80,000 call. However, the persistent demand for puts, which provide protection against declines, is also evident in options skew, which remains negative across all time frames. 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 market volatility, especially if the core figure exceeds the estimated 2.7% annualized increase, potentially leading to further Federal Reserve rate increases and negatively impacting 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 shown a decrease in uncertainty around inflation, interest rates, and macro shocks, indicating calmer conditions in the bond market and a positive signal for crypto bulls.