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

Although bitcoin's price has surged nearly 7% since Sunday to $75,030.05, the recovery has stalled near $72,000 due to key binary risks, including the upcoming US inflation report and US-Iran truce talks. Institutions are adopting a cautious stance, as evident in the options market, where they are pursuing upside potential through call options while also buying downside protection. According to QCP Capital, there is demand for the $45 call expiring in May, indicating expectations of a price increase. However, the persistent demand for puts, which offer protection against declines, suggests a lingering bias towards caution. The US 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 increase, potentially supporting the case for Fed rate increases and weighing on risk assets like bitcoin. The outcome of the US-Iran talks in Pakistan will also be crucial for 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 a calm bond market and a positive signal for crypto bulls.