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

The bitcoin price, currently at $74,762.35, has seen a 7% increase since Sunday but still lacks conviction, stalling near $72,000 due to impending binary risks such as the US inflation report on Friday and US-Iran peace talks over the weekend. Institutions are adopting a cautious approach in the options market, where they are purchasing call options to capitalize on potential gains while also buying 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, the $80,000 call has emerged as a popular bet on Deribit. However, the persistent demand for puts, which offer protection against declines, is also evident 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 significant increase in annualized inflation, primarily driven by rising energy prices due to the Iran war. If the core figure exceeds the estimated 2.7% annualized rate, it could lead to further Federal Reserve rate increases, potentially impacting risk assets like BTC. The meeting between Iranian and US delegates in Pakistan over the weekend will be crucial for financial market stability, and a positive outcome could accelerate BTC's rally. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in US Treasury futures, has shown sharp spikes in uncertainty around inflation, interest rates, or macro shocks, often coinciding with tighter financial conditions and risk-off sentiment in equities, credit, and crypto markets. The index has recently dropped back to 74% after rising to 115% in March, indicating a calm in the world's most important bond market and a positive signal for crypto bulls.