Lack of Conviction in Institutional Bitcoin Positioning May Be Resolved by Upcoming CPI Report and Iran Talks

Although bitcoin's price has surged nearly 7% since Sunday to $75,253.50, the recovery has stalled near $72,000 due to key binary risks, including the upcoming U.S. inflation report on Friday and the U.S.-Iran truce talks over the weekend. Institutions are adopting a cautious stance, as seen in the options market where they are buying calls to bet on potential gains while also purchasing puts for downside protection. According to QCP Capital, there is a notable demand for the $45 call expiring in May for BlackRock's spot bitcoin ETF, indicating an expected price increase. 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 for put options. The U.S. consumer price index for March is anticipated 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 may lead to increased volatility and further support the case for Fed rate increases, potentially affecting risk assets like BTC. The meeting between Iranian and U.S. delegates in Pakistan over the weekend will be crucial in determining 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 U.S. Treasury futures, has shown a decline in uncertainty around inflation, interest rates, or macro shocks, indicating a calm bond market and a positive signal for crypto bulls.