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

Although bitcoin's price has seen a nearly 7% increase since Sunday, reaching $76,213.05, 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, evident in the options market where they are buying call options to speculate on potential gains while also purchasing put options for downside protection. According to QCP Capital, there is demand for the $45 call expiring in May for BlackRock's spot bitcoin ETF (IBIT), indicating expectations of a price rise above the current $40. 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, is also notable. The options skew, which measures the price difference between calls and puts, remains negative across all time frames, indicating a lingering bias towards put options. The U.S. consumer price index (CPI) for March is expected to show a significant increase in annualized inflation, primarily driven by rising energy prices due to the Iran war. If the core figure exceeds the annualized 2.7% estimate, it could lead to further Federal Reserve rate increases, potentially negatively impacting risk assets like bitcoin. The meeting between Iranian and U.S. delegates in Pakistan over the weekend will be crucial for financial market stability, and a positive outcome could accelerate bitcoin's rally. The first signs of this could be seen in Hyperliquid-listed oil perpetual futures. The ICE BofA US Bond Market Option Volatility Estimate Index (MOVE), 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. After rising to 115% in March, the index has dropped back to 74% this month, signaling calmness in the world's most important bond market, which could be a positive sign for crypto bulls.