Lack of Conviction in Institutional Bitcoin Positions; CPI and Iran Talks May Provide Clarity

Despite a nearly 7% rally in bitcoin's price since Sunday, conviction in the market remains weak, with the recovery stalling near $72,000 ahead of key risk events, including the upcoming U.S. inflation report and U.S.-Iran talks. Institutions are adopting a cautious approach, as evident in the options market, where they are buying call options to bet on potential gains while also purchasing put options for downside protection. According to QCP Capital, options tied to BlackRock's spot bitcoin ETF show demand for the $45 call expiring in May, indicating traders expect the price to rise above that level. However, the demand for puts persists, revealing a lingering bias for downside protection. The U.S. consumer price index for March is expected to show a significant increase in annualized inflation, led by rising energy prices. This could lead to market volatility, especially if the core figure exceeds the estimated 2.7% annualized rate. The outcome of the U.S.-Iran talks 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 U.S. Treasury futures, has shown a decrease in turbulence, indicating a green signal for crypto bulls.