Institutions' Bitcoin Bets Lack Conviction Amidst CPI and Iran Talks

The bitcoin price, currently at $76,658.26, has seen a 7% increase since Sunday but still lacks conviction, stalling near $72,000 due to upcoming binary risks such as the U.S. inflation report and U.S.-Iran truce talks. Institutions are adopting a cautious approach in the options market, chasing potential gains through call options while also buying downside protection. Demand for calls tied to BlackRock's spot bitcoin ETF show traders expect the price to rise above $45 from the current $40, with the $80,000 call being the most popular bet on Deribit. However, the demand for puts, which offer protection against declines, persists, as indicated by the negative options skew across all time frames. The upcoming U.S. consumer price index for March is expected to show a significant increase in annualized inflation, potentially leading to market volatility if the core figure exceeds the estimated 2.7%. The 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 sharp spikes in the past, indicating rising uncertainty around inflation, interest rates, or macro shocks. A drop in the index to 74% this month suggests the world's most important bond market is calm again, which could be a positive signal for crypto bulls.