Lack of Conviction in Institutions' Bitcoin Investment Strategies

The bitcoin price, currently at $78,033.85, has seen a nearly 7% increase since Sunday but lacks strong conviction, with its recovery faltering near $72,000 ahead of significant binary risks, including the upcoming US inflation report and US-Iran peace talks. Institutions' cautious approach is reflected in the options market, where they continue to pursue potential gains through call options while also buying downside protection. According to QCP Capital, there is demand for the $45 call expiring in May for BlackRock's spot bitcoin ETF, indicating an expected price increase. Similarly, bitcoin options on Deribit show a preference for the $80,000 call. However, the persistent demand for puts, which provide protection against declines, reveals a lingering bias towards put options, as evidenced by the negative options skew across all time frames. The upcoming 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. This could lead to market volatility, especially if the core figure exceeds the estimated 2.7% annualized rate, potentially leading to further Fed rate increases and negatively impacting risk assets like bitcoin. The meeting between Iranian and US delegates in Pakistan over the weekend 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 uncertainty around inflation, interest rates, and macro shocks, indicating calmer conditions in the world's most important bond market and a positive signal for crypto bulls.