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

Despite a 7% increase in bitcoin's price since Sunday, the recovery has stalled near $72,000 due to key risks, including the upcoming US inflation report and US-Iran truce talks. Institutions are adopting a cautious approach, buying call options to speculate on potential gains while also purchasing put options for downside protection. According to QCP Capital, options for BlackRock's spot bitcoin ETF show demand for the $45 call expiring in May, indicating traders expect the price to rise above the current $40. Similar flows have been observed on Deribit, with the $80,000 call emerging as a popular bet. However, the demand for puts persists, revealing a lingering bias for downside protection. The US consumer price index for March is expected to show a significant 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. 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 a decrease in uncertainty, indicating a calm bond market and a positive signal for crypto bulls.