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

The recent 7% surge in bitcoin's price to $75,799.76 has not been accompanied by strong conviction, as the recovery has stalled near $72,000 ahead of significant binary risks, including the upcoming US inflation report and US-Iran truce talks. Institutions are adopting a cautious approach in the options market, where they are purchasing calls to speculate on potential gains while also buying puts to protect against losses. 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 increase 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 offer protection against declines, suggests a lingering bias towards caution. The US consumer price index for March is expected to show a significant increase in annualized inflation, primarily driven by rising energy prices. This may lead to market volatility, particularly if the core figure exceeds the estimated 2.7% annualized increase, which could strengthen the case for Fed rate increases and potentially weigh on risk assets like BTC. The meeting between Iranian and US delegates in Pakistan over the weekend may also impact financial market stability, with a potential agreement to end the war and normalize oil tanker traffic through the Strait of Hormuz likely to accelerate BTC's rally. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in US Treasury futures, has shown a decrease in turbulence, indicating calmer conditions in the bond market and a positive signal for crypto bulls.