Lack of Conviction in Institutional Bitcoin Positions; CPI and Iran Talks May Bring Clarity

The recent 7% rally in bitcoin's price to $75,750.45 has not been accompanied by strong conviction, as the recovery has stalled near $72,000 ahead of key events such as the US inflation report and US-Iran talks. Institutions are adopting a cautious approach, buying call options to bet 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, while Deribit's bitcoin options have seen significant interest in the $80,000 call. However, the persistent demand for puts and negative options skew across all time frames indicate a lingering bias towards downside protection. The upcoming US consumer price index is expected to show a marked increase in annualized inflation, led by rising energy prices, which could lead to market volatility if the core figure exceeds estimates. The meeting between Iranian and US delegates 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 US Treasury futures, has shown a recent spike and subsequent drop, indicating a calm bond market that could be a positive signal for crypto bulls.