Lack of Conviction in Institutions' Bitcoin Positioning; CPI and Iran Talks May Provide Clarity

The bitcoin price, currently at $77,321.70, has seen a 7% increase since Sunday, but the recovery has stalled near $72,000 due to key binary risks, including the upcoming U.S. inflation report and U.S.-Iran truce talks. Institutions are adopting a cautious strategy, as evident in the options market, where they are buying calls to bet on potential gains while also seeking downside protection through puts. 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 have seen a popular bet on the $80,000 call. However, the demand for puts persists, revealing a lingering bias for downside protection. The U.S. consumer price index for March is expected to show a significant increase in annualized inflation, primarily driven by rising energy prices. This may lead to market volatility, especially if the core figure exceeds the estimated 2.7% annualized rate, potentially weighing on risk assets like bitcoin. The weekend meeting between Iranian and U.S. delegates in Pakistan may also impact 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 U.S. Treasury futures, has shown a decrease in uncertainty around inflation and interest rates, indicating a calm bond market and a positive signal for crypto bulls.