Lack of Conviction in Institutional Bitcoin Positioning; CPI and Iran Talks May Be Key

Despite a 7% price increase since Sunday, bitcoin's 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, buying call options to bet on potential gains while also purchasing downside protection. According to QCP Capital, options for BlackRock's spot bitcoin ETF show demand for the $45 call expiring in May, indicating an expected price rise above the current $40. Similarly, bitcoin options on Deribit have seen significant demand for the $80,000 call. However, the persistent demand for puts, which offer protection against declines, suggests a lingering bias for put options. The U.S. consumer price index for March is expected to show a marked increase in annualized inflation, primarily driven by rising energy prices. This could lead to market volatility, particularly if the core figure exceeds the estimated 2.7% annualized rate, potentially weighing on risk assets like bitcoin. The outcome of the U.S.-Iran talks in Pakistan 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 U.S. Treasury futures, has shown a decrease in turbulence, indicating a calm bond market and a positive signal for crypto bulls.