Institutional Bitcoin Bets Lack Confidence Amidst CPI and Iran Talks

The recent 7% surge in bitcoin's price to $76,966.32 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 approach, purchasing call options to bet on potential gains while also buying downside protection. According to QCP Capital, there is demand for the $45 call expiring in May for BlackRock's spot bitcoin ETF, indicating expectations of a 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 provide protection against declines, suggests a lingering bias towards caution. The options skew, which measures the price differential between calls and puts, remains negative across all time frames, indicating a continued preference for put options. The upcoming US consumer price index for March is expected to show a significant 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 supporting the case for Fed rate increases and weighing on risk assets like bitcoin. The weekend meeting between Iranian and US delegates in Pakistan is also crucial for financial market stability, and a positive outcome could accelerate bitcoin's rally. The first indications of this could be seen in Hyperliquid-listed oil perpetual futures. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in US Treasury futures, has recently spiked and then dropped back, indicating a return to calm in the world's most important bond market, which could be a positive signal for crypto bulls.