The recent 7% surge in bitcoin's price to $74,487.09 has not been accompanied by strong conviction, as the recovery has stalled near $72,000 ahead of key events such as Friday's US inflation report and US-Iran truce talks. Institutions are adopting a cautious approach, evident in the options market where they are buying call options to speculate 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, indicating expectations of a price rise above the current $40 level. Similarly, bitcoin options on Deribit have seen interest in the $80,000 call, but the demand for puts persists, revealing a lingering bias for protection against declines. The 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. Markets may experience volatility if the core figure exceeds the estimated 2.7% annualized rate, potentially leading to further Federal Reserve rate increases and negatively impacting risk assets like bitcoin.
The upcoming 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 recent spike and subsequent drop, indicating a calmer bond market and a positive signal for crypto bulls.