BTC Climbs Past $87K as US Payrolls Miss Sharply in September

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In Today's Note

• September nonfarm payrolls rose just 29,000 against 90,000 expected, with unemployment up to 4.2% and annual wage growth cooling to 3.0%, lifting the S&P 500 0.73% and the Nasdaq-100 1% to a record high, as BTC rose 1.3% to $86.2K and ETH gained 0.8% to $2,720.
• Bloomberg Terminal added Hyperliquid perpetual futures data, OKX filed with the SEC to run a tokenized US stock platform under the Innovation Exemption, and Ethereum Layer 2 Blast announced it will shut down after its TVL fell to about $32M.

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Market Snapshot: Overnight Moves

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Macro & Markets

• A slowdown in the US jobs market helped drive risk assets higher on Friday with BTC surging up past $87K while Fed Funds futures contracts now price in a 20% probability of an October rate hike. 
• The S&P 500 rose 0.73%, while the tech-heavy Nasdaq-100 rallied a full 1% to a record high. 
• Two-year US Treasuries briefly rose as yields fell around 10bps to 4.72% following the jobs data before rebounding sharply again and currently trading back above 4.8%. 

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• The BLS’s nonfarm payrolls report showed the US labour market added 29,000 jobs in September, far fewer than the median 90,000 expected, and the nonfarm payrolls count for the prior two months were downwardly revised. 
• The August figure was downwardly revised from 162,000 to 133,000, while in July, the numbers were revised to show the economy lost 10,000 jobs, the second time this year that payrolls turned negative.
• The unemployment rate also rose to 4.2% from 4.1%, partly reflecting a growing workforce.

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• Healthcare continued to contribute to the job growth, adding 17,000 positions, though that was well below the average monthly gain of 33,000 over the past 12 months in that sector. 
• Payrolls declined in local government and in a select number of industries most exposed to artificial intelligence, such as information, professional and business services, and financial activities, while investment in data centers and other AI-related infrastructure helped support additional hiring in construction (+11,000) and manufacturing (+9,000).

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• The report also provided further evidence of the Fed’s view that the labour market is not a source of inflation, with wage growth cooling as average hourly earnings rose 0.1% in September, after a 0.3% gain in August. That lowered the annual increase in wages to 3.0% from 3.1% in August.

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• In an interview with Axios News published on the weekend, Treasury Secretary Scott Bessent shrugged off the recent rise in US Treasury yields as being in line with global trends, despite some of the benchmark rates being at highs last seen in the early 2000’s. 
• Bessent said, "I would be concerned if we were having some kind of idiosyncratic rise. We're not seeing people selling treasuries to buy German bonds or Japanese bonds."
• He added that in his role, he cannot “control the bond market. What I can do is get people to slow down and think”.
• The Treasury Secretary said that the ripple effects of the Iran war are masking underlying US economic strength and dismissed concerns about an AI-driven bubble, arguing that key players such as Microsoft Corp., Alphabet Inc.'s Google and Meta Platforms Inc., are investing substantial capital and generating significant revenue growth for firms such as Anthropic and OpenAI.
  

Defi/ Crypto

• Bloomberg Terminal has added market data for Hyperliquid perpetual futures, allowing professional users to monitor the exchange’s 24/7 contracts through the Terminal as part of a data integration.
• The coverage includes Hyperliquid’s crypto markets and HIP-3 markets, which offer perpetual contracts linked to oil, gold, silver, the S&P 500 and individual stocks including semiconductor companies; Hyperliquid supports more than 100 assets overall.

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• OKX, a global cryptocurrency exchange, has filed with the U.S. Securities and Exchange Commission to operate a tokenized U.S. stock trading platform, seeking to use the regulator’s new Innovation Exemption, which permits qualifying venues to offer onchain trading of U.S.-listed shares under temporary conditions. 
• The proposed U.S. service would need tokenized shares to provide investors the same rights as the underlying stocks, including dividends and voting rights, unlike OKX’s existing tokenized-stock products in some overseas markets, which explicitly provide no direct ownership or shareholder rights.

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• BitGo Chief Executive Officer Mike Belshe said the Senate’s failure to advance the Clarity Act, a U.S. crypto market structure bill, leaves financial firms able to combine exchange, brokerage and custody functions without rules designed to separate the risks created by those activities.
• Belshe said the main dangers are custody risk and counterparty credit risk, warning that if a major one-stop financial platform suffered a custody failure, “the entire market goes down.”
• He compared the potential consequences with the 2008 financial collapse, “Imagine if that had been the New York Stock Exchange offering those services and the whole New York Stock Exchange went down,” to illustrate the systemic risk he sees in concentrating several core market functions in one institution.

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• The European Central Bank is considering three ways to use central bank money on blockchain-based financial networks: issuing reserves directly on a programmable platform, connecting its existing settlement system to blockchain networks, or allowing private settlement tokens that are fully backed by reserves held at the central bank.
• Under the second model, central bank reserves would remain in the European Central Bank’s existing settlement system rather than becoming tokens, while an interoperability layer would connect payments there with tokenized securities and other assets operating on distributed-ledger networks.
• The European Central Bank is already testing parts of this approach through Pontes, which provides central bank money for settling transactions involving tokenized assets, and Appia, which is examining longer-term designs for tokenized financial markets.

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• Blast, an Ethereum Layer 2 network backed by Paradigm and Standard Crypto, said it will shut down because the cost of running the chain now exceeds the revenue it generates and the team does not see a viable path to making the network financially sustainable.
• Blast’s total value locked has fallen to about $32M, down from more than $2B before its February 2024 mainnet launch, while the BLAST token fell 17% on Friday, leaving its market capitalization near $23M.
• Users are being asked to move assets back to Ethereum mainnet, with withdrawals through Blast’s normal interface available until Oct. 26 after a temporary pause for Lido-related withdrawals; after that, users will need to interact directly with Blast’s bridge contracts on Ethereum.

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• TRON said cumulative transaction volume on its blockchain has surpassed $30T, alongside more than 405M user accounts, 15B transactions, over $28B in total value locked and more than $94B of circulating USDT.
• The network has processed about $6T in USDT transfer volume year to date, averaging roughly $25B per day, while institutional access has expanded through the Canary Staked TRX ETF, Bitnomial TRX products and Anchorage Digital custody and staking support.

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• Payward, the financial infrastructure company behind Kraken, has partnered with Singapore Gulf Bank, a digital bank regulated by the Central Bank of Bahrain, to connect Payward with SGB Net, allowing select institutional clients in Asia and the Gulf to settle U.S. dollar transactions instantly, 24/7, with additional currencies and clients planned later. 
• Singapore Gulf Bank will also use Kraken Prime, Payward’s institutional brokerage service, as an additional source of digital asset liquidity and use Payward’s markets to price customer trades.

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This Week's Calendar

Charts of the Day

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Figure 1. Block Scholes BTC Risk-Appetite Index (white, left-hand axis) and BTC spot price (orange, right-hand axis).

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Figure 2. Block Scholes ETH Risk-Appetite Index (white, left-hand axis) and ETH spot price (purple, right-hand axis).

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Figure 3. BTC at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes.

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Figure 4. ETH at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes.

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Figure 5. BTC 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes.

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Figure 6. ETH 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes.

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