Trader Accumulates Put Options for Downside Protection, Federal Reserve to Prioritize Inflation Impact

BlockBeats News, March 7th, according to CoinDesk's report, Trump's executive order to establish a strategic Bitcoin reserve did not clearly state that additional purchases would be made. Disappointment led traders to rush to buy Bitcoin, Ethereum, and Solana short-term put options, causing a significant premium compared to call options.

Block Scholes research analyst Andrew Melville stated: "Bitcoin, Ethereum, and Solana's short-term skew indicators once again show bearish demand. However, Bitcoin and Ethereum options expiring in April and beyond remain bullish, and the derivatives market fully reflects the disappointment following the release of Trump's strategic reserve order. The term structure of Bitcoin and Ethereum has shifted from deep backwardation for most of March to a flat curve. With the market digesting the uncertainty of Friday's non-farm payrolls and the crypto summit, short-term at-the-money option volatility dropped by over 10 points."

Traders are looking forward to Friday's White House crypto summit bringing good news to the market, and the equally anticipated U.S. February non-farm payrolls report to be released at 21:30 Beijing time. Reuters predicts that new job additions are expected to rise from 143,000 in January to 160,000, with the unemployment rate staying at 4% and the month-on-month growth rate of average hourly wages slowing from 0.5% to 0.3%. If the data is weaker than expected, it will reinforce the market's expectation of at least three Fed rate cuts this year, supporting risk assets such as Bitcoin. However, considering the inflationary effect of Trump's tariff policy, the sustainability of the uptrend is uncertain.

Markus Thielen, founder of 10x Research, pointed out in a client report: "Market interest rate expectations have shifted to three rate cuts this year instead of one. But this may be too optimistic - the Fed may prioritize assessing the impact of Trump's policies on inflation, a process that could take months or even several quarters. Therefore, the Fed may temporarily maintain a neutral stance. Compared to the Biden administration, the 'Fed put options' during Trump's tenure may have a lower threshold for policy intervention, meaning that decision-makers will tolerate greater market volatility before intervening."