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

The recent 7% surge in bitcoin's price to $76,192.51 has not been accompanied by strong conviction, as the recovery has stalled near $72,000 ahead of key events such as Friday's US inflation report and US-Iran truce talks. Institutions are adopting a cautious approach in the options market, where they are buying call options to speculate on potential gains while also purchasing 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 increase above $40. Similarly, bitcoin options on Deribit have seen significant interest in the $80,000 call. However, the persistent demand for put options reflects a lingering bias towards protection against declines. 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 growth, it may lead to increased expectations of Fed rate hikes, potentially negatively impacting risk assets like bitcoin. The outcome of the US-Iran talks in Pakistan will also be crucial for 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 in the US bond market, indicating a positive signal for crypto bulls.