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

Although bitcoin's price has seen a nearly 7% increase since Sunday, its recovery has stalled near $72,000 due to upcoming key events, including the U.S. inflation report and U.S.-Iran talks. Institutions are adopting a cautious strategy, as seen in the options market where they are purchasing calls to speculate on price gains while also buying 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. Similarly, the $80,000 call is the most popular bet on Deribit. However, the demand for puts persists, reflecting a lingering bias for protection against declines. The U.S. consumer price index for March is expected to show a significant increase in annualized inflation, primarily driven by rising energy prices due to the Iran war. This could lead to market volatility, especially if the core figure exceeds the estimated 2.7% annualized rate, potentially supporting the case for Fed rate increases and negatively impacting risk assets like BTC. The meeting between Iranian and U.S. delegates in Pakistan may bring stability to financial markets, and a positive outcome could accelerate BTC's rally. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in U.S. Treasury futures, has recently dropped to 74% after spiking in March, indicating calmer conditions in the bond market and a positive signal for crypto bulls.