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

The recent 7% surge in bitcoin's price to $75,032.30 has not been enough to instill conviction, as the recovery has stalled near $72,000 ahead of key events such as Friday's US inflation report and US-Iran truce talks. Institutions are adopting a cautious strategy, buying call options to bet on bitcoin's potential gains while also purchasing downside protection. According to QCP Capital, there is demand for the $45 call expiring in May, indicating expectations of a price rise above the current $40. Similarly, Deribit's bitcoin options have seen interest in the $80,000 call, but demand for puts, which offer protection against declines, persists. The options skew, which measures the price differential between calls and puts, remains negative, indicating a lingering bias for put options. The upcoming US consumer price index (CPI) 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 weighing on 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 (MOVE) has shown a decrease in volatility in US Treasury futures, which could be a positive signal for crypto bulls.