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

Although bitcoin's price has surged nearly 7% since Sunday to $74,407.14, its recovery has stalled near $72,000 due to key binary risks, including the upcoming US inflation report and US-Iran truce talks. Institutions' cautious approach is reflected in the options market, where they are buying calls while also seeking downside protection through puts. According to QCP Capital, options for BlackRock's spot bitcoin ETF show demand for the $45 call expiring in May, indicating an expected price rise above the current $40. Similarly, bitcoin options on Deribit have seen significant demand for the $80,000 call. However, the persistent demand for puts and negative options skew across all time frames suggest a lingering bias towards downside protection. The US consumer price index for March is expected to show a marked increase in annualized inflation, primarily driven by rising energy prices. This could lead to market volatility, especially if the core figure exceeds the estimated 2.7% annualized rate, potentially cementing the case for Fed rate increases and weighing on risk assets like bitcoin. The upcoming 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 a decrease in turbulence, indicating calmer conditions in the global finance and collateral and credit creation, and potentially signaling a green light for crypto bulls.