Despite a 7% rally in bitcoin's price since Sunday, conviction remains weak due to key binary risks, including the upcoming U.S. inflation report and U.S.-Iran truce talks. Institutions are adopting a cautious approach, chasing upside via call options while also buying downside protection.
Demand for calls is evident, with the $80,000 call emerging as a popular bet, but demand for puts persists, indicating a lingering bias for downside protection. The U.S. consumer price index for March is expected to show a marked increase in annualized inflation, which may lead to volatility if the core figure exceeds estimates, potentially weighing on risk assets such as bitcoin.
The outcome of the U.S.-Iran talks may also impact financial market stability and bitcoin's rally. The ICE BofA US Bond Market Option Volatility Estimate Index, which reflects volatility in U.S.
Treasury futures, has dropped back to 74% after a sharp spike in March, indicating a calm bond market and a positive signal for crypto bulls.