Lack of Conviction in Institutions' Bitcoin Positioning

The recent 7% rally in bitcoin's price to $77,378.75 has not been accompanied by strong conviction, as the recovery has stalled near $72,000 ahead of key events such as the US inflation report and US-Iran talks. Institutions are taking a cautious approach, buying call options to bet on potential gains while also purchasing 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 rise above the current $40. Similarly, the $80,000 call is the most popular bet on Deribit. However, the demand for puts, which offer protection against declines, persists, as revealed by the negative options skew across all time frames. The upcoming US consumer price index is expected to show a significant increase in annualized inflation, led by rising energy prices, which could lead to market volatility if the core figure exceeds estimates. The meeting between Iranian and US delegates in Pakistan also holds the key to financial market stability, and a potential end to the war 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 sharp spike in March but has since dropped back, indicating a calm bond market and a positive signal for crypto bulls.