Lack of Conviction in Institutions' Bitcoin Positioning; CPI and Iran Talks May Provide Direction

Despite bitcoin's recent 7% price surge to $74,076.41, conviction remains lacking, with the recovery faltering near $72,000 ahead of significant binary risks, including Friday's US inflation report and US-Iran truce talks. Institutions are adopting a cautious approach, evident in the options market, where they are pursuing upside potential via calls while also buying downside protection. According to QCP Capital, options for BlackRock's spot bitcoin ETF show demand for the $45 call expiring in May, indicating expectations of a price increase above the current $40 level. Similarly, bitcoin options on Deribit have seen significant interest in the $80,000 call. However, demand for puts, which provide protection against declines, persists. The ongoing demand for protection is also reflected in options skew, which remains negative across all time frames, indicating a lingering bias towards put options. The US consumer price index for March is expected to show a notable 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 weekend meeting between Iranian and US delegates in Pakistan will be crucial for 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 first indications of this could emerge through Hyperliquid-listed oil perpetual futures.