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

The recent 7% surge in bitcoin's price to $77,246.25 has not been accompanied by strong conviction, as the recovery has stalled near $72,000 ahead of significant events such as the US inflation report and US-Iran truce talks. Institutions are adopting a cautious stance, as seen in the options market where they are buying calls to speculate on potential gains while also purchasing puts for downside protection. The demand for $80,000 calls on Deribit and the $45 call expiring in May for BlackRock's spot bitcoin ETF (IBIT) indicates a bullish outlook, but the persistence of demand for puts suggests a lingering bias towards protection against declines. The upcoming US consumer price index (CPI) for March is expected to show a significant increase in annualized inflation, primarily driven 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, 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 (MOVE) has shown a decrease in volatility in US Treasury futures, indicating a calm bond market and a positive signal for crypto bulls.