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

Although bitcoin's price has increased by nearly 7% since Sunday to $73,725.85, the 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, evident in the options market where they are buying call options to bet on potential gains while also purchasing put options 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 $40. Similarly, bitcoin options on Deribit show a popular bet on the $80,000 call, but the demand for puts persists. The options skew, measuring the price differential between calls and puts, remains negative across all time frames, indicating a lingering bias for put options. 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 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, which reflects volatility in US Treasury futures, has shown sharp spikes in March, indicating rising uncertainty around inflation, interest rates, or macro shocks. However, the index has dropped back to 74% this month, signaling calmness in the world's most important bond market and a positive sign for crypto bulls.