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

Despite bitcoin's recent 7% price surge to $77,143.44, 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 taking a cautious approach, evident in the options market where they are pursuing upside potential via calls while also buying downside protection. QCP Capital reports that 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 level. Similarly, bitcoin options on Deribit have seen significant 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 differential 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, led by rising energy prices, may lead to market volatility if the core figure exceeds the estimated 2.7% annualized rate. This could further support the case for Fed rate increases, potentially impacting risk assets like bitcoin. The upcoming meeting between Iranian and U.S. delegates in Pakistan may also influence 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 recently shown a sharp spike, indicating rising uncertainty around inflation, interest rates, or macro shocks. However, the index has since dropped back, signaling a return to calmer conditions in the bond market, which could be a positive sign for crypto bulls.