Institutions Lack Conviction in Bitcoin Despite Price Rally

The price of bitcoin has seen a nearly 7% increase since Sunday, but its recovery has stalled near $72,000 due to uncertainty surrounding key events, including the upcoming US inflation report and US-Iran negotiations. Institutions are adopting a cautious approach, as seen in the options market, where they are purchasing call options to speculate on potential gains while also buying put options for downside protection. According to QCP Capital, there is demand for call options tied to BlackRock's spot bitcoin ETF, which suggests traders expect the price to rise above $45 by May. Similarly, options on Deribit have seen significant interest in the $80,000 call. However, the persistent demand for put options, which offer protection against declines, indicates a lingering bias towards caution. 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 increase, potentially supporting the case for further Fed rate increases and weighing on risk assets like bitcoin. The outcome of the US-Iran meeting in Pakistan will also be crucial for financial market stability, and a positive outcome could 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 after spiking in March, which could be a positive signal for crypto bulls.