Lack of Conviction in Institutional Bitcoin Positions

The recent 7% surge in bitcoin's price to $74,735.17 has not been accompanied by strong conviction, as the recovery has stalled near $72,000 ahead of key events such as the US inflation report and US-Iran talks. Institutions are adopting a cautious approach, purchasing call options to bet on potential gains while also buying protection against declines. According to QCP Capital, there is demand for the $45 call expiring in May, indicating expectations of a price rise above this level. However, the persistent demand for puts, which offer downside protection, suggests a lingering bias towards caution. The upcoming US consumer price index (CPI) for March is expected to show a significant increase in annualized inflation, primarily driven by rising energy prices. This could lead to market volatility, particularly if the core figure exceeds the estimated 2.7% annualized rate. The meeting between Iranian and US delegates in Pakistan is also crucial, as a resolution to the conflict could lead to increased stability in financial markets and accelerate bitcoin's rally. The ICE BofA US Bond Market Option Volatility Estimate Index (MOVE) has shown a decrease in uncertainty around inflation, interest rates, and macro shocks, which could be a positive signal for crypto markets.