Key Insights:
- Bitcoin (BTC) traders are buying inexpensive puts as a hedge against a potentially robust job report that might trigger a sell-off in risk assets.
- The upcoming nonfarm payrolls report is anticipated to reflect the addition of 110,000 jobs, with the unemployment rate predicted to remain unchanged at 4.2%.
As the release of the U.S. nonfarm payrolls report (NFP) approaches, BTC traders on the CME are acquiring cheap bearish bets by purchasing far out-of-the-money puts, safeguarding themselves against an unexpectedly positive report that could lead to a sell-off in risk assets.
The NFP, expected on Friday, is predicted to show an increase of 110,000 jobs, up from 73,000 in July, based on consensus estimates from FactSet. The jobless rate is expected to hold steady at 4.2%, with hourly earnings projected to rise 0.3%.
Data suggests a potential slowdown in the labor market, with job openings dropping to 7.2 million in July. Although figures indicate developing circumstances that might support Federal Reserve rate cuts, they also prompt traders to brace for the potential of a strong NFP report, which could affect BTC value.
Gabe Selby, head of research at CF Benchmarks, noted that there’s significant interest in leveraged downside exposure, signifying investors are preparing for potential surprises in the jobs report.
Put options provide the right to sell an underlying asset at a specified price, serving as a hedge against price drops or a speculative bet on declines. The current focus on put buying appears to span both short- and long-term expiration dates, reflecting a market adjusting to perceived risks.
BTC’s daily chart. (TradingView/CoinDesk)
As of now, BTC is trading around $109,950, having decreased by 2% in the past 24 hours, with resistance noted just above $112,000.
