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

Although bitcoin's price has risen by nearly 7% since Sunday to $75,690.37, the recovery has stalled near $72,000 due to key binary risks, including Friday's US inflation report and US-Iran truce talks. Institutions are adopting a cautious stance, as seen in the options market where they are purchasing calls to bet on potential gains while also buying puts for downside protection. According to QCP Capital, there is demand for the $45 call expiring in May for BlackRock's spot bitcoin ETF, indicating an expected price increase. Similarly, bitcoin options on Deribit have seen a surge in demand for the $80,000 call. However, the persistent demand for puts, which offer protection against declines, is also evident in options skew, which remains negative across all time frames. The upcoming US consumer price index 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 estimated 2.7% annualized rate, it may lead to further Federal Reserve rate increases, potentially negatively impacting risk assets like bitcoin. The meeting between Iranian and US delegates in Pakistan over the weekend will be crucial in determining financial market stability, and a positive outcome could accelerate bitcoin's rally. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in US Treasury futures, has shown a decrease in uncertainty around inflation and interest rates, indicating a positive signal for crypto bulls.