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

The bitcoin price, currently at $75,636.34, has seen a 7% increase since Sunday, but the lack of conviction is evident as the recovery has stalled near $72,000, pending key binary risks such as Friday's US inflation report and US-Iran truce talks. Institutions are taking a cautious approach, using call options to bet on potential gains while also buying 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 rise above $40. Similarly, bitcoin options on Deribit have seen interest in the $80,000 call, but there is still a demand for puts, which offer protection against declines. The options skew, measuring the price differential between calls and puts, remains negative, indicating a lingering bias for put options. The upcoming US consumer price index report is expected to show a marked increase in annualized inflation, primarily due to rising energy prices. This may lead to market volatility, especially if the core figure exceeds the estimated 2.7% annualized rate, potentially leading to further Fed rate increases and affecting risk assets like bitcoin. The meeting between Iranian and US delegates in Pakistan 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 decrease in uncertainty around inflation and interest rates, indicating calmer conditions in the bond market and a positive signal for crypto bulls.