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

Although bitcoin's price has seen a nearly 7% increase since Sunday, its recovery has stalled near $72,000 due to looming binary risks, including the upcoming US inflation report and US-Iran truce talks. Institutions are adopting a cautious approach, as evident in the options market where they are pursuing upside potential via calls while also buying 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 the price rising above the current $40. Similarly, bitcoin options on Deribit have seen demand for the $80,000 call. However, the persistent demand for puts, which provide protection against declines, is also notable. The 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 supporting 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 be crucial for financial market stability, and a positive outcome could 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 and interest rates, indicating calmer conditions in the global finance and collateral and credit creation.