Bitcoin Traders Buy Bearish Puts Ahead of August NFP Report
As the August U.S. nonfarm payrolls report approaches, traders on the CME are buying inexpensive out-of-the-money puts for bitcoin (BTC) to hedge against a strong jobs report that could lead to a sell-off in risk assets.
Key points about the upcoming NFP:
- Expected job additions: 110,000, up from 73,000 in July
- Jobless rate forecast: steady at 4.2%
- Hourly earnings projected increase: 0.3%
Labor market indicators show a decline in job openings to 7.2 million and a low quit rate, suggesting moderating wage pressures. The ADP report indicates only 54,000 private sector jobs added in August, down from 104,000 in July. These figures may support expectations for Federal Reserve rate cuts, which could positively impact asset prices.
Despite this, CME traders are preparing for an upbeat NFP, which might lower Fed rate cut expectations and negatively affect BTC. Gabe Selby from CF Benchmarks noted robust demand for leveraged downside exposure through 5-delta OTM puts, indicating investors are bracing for a potential upside surprise in the jobs report.
5-delta put options are deep out-of-the-money puts, offering low-cost hedging or speculation on sharp price drops. Recent put buying spans both short-term and long-term expiries, reflecting recalibrated market risks. Options on Deribit, the largest crypto options exchange, also show increased downside fears, with near-dated puts trading at a premium to calls.
Currently, BTC is priced at $109,950, down 2% over the last 24 hours. A recovery attempt has faced resistance above $112,000, reinforcing the significance of the August 3 low.