Lack of Conviction in Institutional Bitcoin Investments; CPI and US-Iran Talks May Bring Clarity

The recent 7% surge in bitcoin's price to $75,864.14 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 strategy, purchasing call options to speculate on potential gains while also buying put options to protect against losses. The demand for $80,000 call options and the persistence of put options indicate a lingering bias towards downside protection. The upcoming US consumer price index (CPI) report is expected to show a significant increase in annualized inflation, primarily driven by rising energy prices due to the Iran war. If the core inflation figure exceeds the estimated 2.7%, it may lead to increased volatility and potentially weigh on risk assets like bitcoin. The US-Iran talks in Pakistan may also impact financial market stability, and a positive outcome could accelerate bitcoin's rally. The ICE BofA US Bond Market Option Volatility Estimate Index (MOVE) has shown a decrease in volatility, indicating calmer conditions in the US bond market, which could be a positive signal for crypto bulls.