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

Despite a nearly 7% surge in bitcoin's price since Sunday, conviction in the market remains weak, with the recovery faltering near $72,000 ahead of significant binary risks, including the upcoming U.S. inflation report and U.S.-Iran truce talks. Institutions are adopting a cautious approach, evident in the options market, where they are pursuing upside potential via calls while also buying downside protection. According to QCP Capital, there is demand for the $45 call expiring in May, indicating expectations of a price rise above the current $40 level. Similar flows have been observed in bitcoin options on Deribit, with the $80,000 call emerging as a popular bet. However, demand for puts, which offer protection against declines, persists, reflecting a lingering bias for put options. The U.S. 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 rate, potentially supporting the case for Fed rate increases and weighing on risk assets like BTC. The meeting between Iranian and U.S. delegates in Pakistan may hold the key to financial market stability, with a potential end to the war and normalization of 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 U.S. Treasury futures, has shown sharp spikes in uncertainty around inflation, interest rates, or macro shocks. After rising to 115% in March, the index has dropped back to 74% this month, indicating a calm in the world's most important bond market and a positive signal for crypto bulls.