Lack of Conviction in Institutions' Bitcoin Positioning

The recent 7% surge in bitcoin's price to $77,127.87 has yet to demonstrate strong conviction, as the recovery has stalled near $72,000 ahead of significant binary risks, including the upcoming U.S. inflation report and U.S.-Iran truce talks. Institutions are adopting a cautious approach, evident in the options market where they are purchasing calls to speculate on potential gains while also buying puts to protect against losses. 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. Similarly, bitcoin options on Deribit have seen interest in the $80,000 call. However, the persistent demand for puts, which offer protection against declines, is also notable. The options skew, measuring the price difference between calls and puts, remains negative across all time frames, indicating a lingering bias towards put options. The expected increase in the U.S. consumer price index for March, driven by rising energy prices, may lead to market volatility, particularly if the core figure exceeds the estimated 2.7% annualized inflation. The meeting between Iranian and U.S. delegates in Pakistan may also impact financial market stability, with a potential resolution to the conflict possibly accelerating bitcoin's rally. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in U.S. Treasury futures, has shown a decrease in uncertainty around inflation and interest rates, potentially signaling a positive outlook for crypto markets.