The US labour market is quietly falling apart. That’s bad news for Bitcoin and Ethereum heading into December.
Layoffs jumped to their highest level since 2003. Companies are freezing hiring. Consumer confidence just tanked. Meanwhile, crypto liquidity remains dangerously thin after October’s crash. So any shift in economic data or Fed policy could trigger massive price swings.
The pressure is mounting for a rate cut. But whether that saves crypto or sinks it depends entirely on what happens next in the job market.
Layoffs Surge to 20-Year Highs
October layoffs exploded. Job cuts tracked by MacroEdge jumped 70,609 month-over-month to 154,559. That’s the highest reading in at least two years.
Monthly job cuts now exceed 100,000 for the fifth time this year. Major employers across tech, retail, and manufacturing either cut staff or froze hiring entirely. Tariff costs, AI restructuring, and post-pandemic uncertainty all played roles.
Consumer confidence fell sharply in November as job insecurity spread. Yet weekly jobless claims remain surprisingly low. This creates a confusing picture. The economy is softening, but it hasn’t fully collapsed yet.
Markets interpret this as a clear signal. The Fed needs to cut rates before things get worse. Futures now price a 25-basis-point cut at the December meeting. Traders expect significant easing throughout 2026.
A December cut would mark a sharp reversal. The Fed spent months insisting on “higher for longer” rates. Now labour-market weakness forces their hand.
Crypto Liquidity Is Still Broken
Bitcoin and Ethereum operate in dangerously thin markets right now. The October 10 liquidation shock damaged market-maker capacity. Order books still haven’t recovered.
Tom Lee described the market as “limping” for six weeks due to reduced liquidity. Market makers cut their risk inventories after getting burned. That leaves fewer buyers and sellers at each price level.
This matters more for crypto than stocks. When liquidity is thin, macro shifts hit digital assets harder and faster. Interest-rate changes that nudge equities can slam crypto violently in either direction.
November proved this dynamic. Bitcoin dropped nearly 30% from its October peak. ETF outflows accelerated the decline. Thin liquidity amplified every sell order.
On-chain metrics show some stabilisation now. The 90-day Taker CVD moved from persistent selling to neutral. Users are borrowing against Bitcoin instead of selling it. That reduces immediate supply pressure but creates latent liquidation risk if prices fall.
December Could Rally or Crash
A December rate cut would reduce real yields. Lower yields typically push investors toward risk assets like Bitcoin. Crypto historically rallies during such conditions, especially after deep drawdowns.
Several momentum indicators already turned positive. The Fear and Greed Index lifted from 11 to 22. Average crypto RSI rose toward 60 after touching oversold levels. MACD also turned positive recently.
But ETF flows remain the wild card. November saw heavy outflows. Recent days show tentative inflows, but the trend isn’t confirmed. If ETF demand returns, thin liquidity could amplify upside moves dramatically.
If outflows resume instead, the market revisits recent lows. Maybe worse.
Macro signals will dominate crypto into year-end. A dovish Fed might trigger a rally similar to 2023. A hawkish tone could destroy the current recovery and extend November’s bearish trend.
Exchange inflow data shows large players moving Bitcoin onto platforms. This often signals rotation rather than accumulation. It gives the market more room for distribution, which could cap any rally attempt.
January Brings Even More Volatility
Even if crypto rallies in December, January 2026 carries serious risks. The combined October–November employment report drops on December 16. That report may confirm deeper labour stress not yet visible in weekly data.
If layoffs accelerate into January, risk assets will weaken. Markets could interpret labour deterioration as a recession signal. In that scenario, rate cuts won’t offset broad risk aversion.
Bitcoin reacts first in such conditions due to its liquidity profile. It could fall faster than equities if recession fears spread.
Alternatively, the report might show moderate softness with stable wage growth. That would suggest a controlled slowdown. Markets could price this as “soft landing” confirmation, supporting a rally into early 2026.
Either way, liquidity conditions will govern the scale of price swings. With momentum improving but liquidity still thin, the market is primed for a major move. The direction depends entirely on how the Fed responds to growing labour-market pressure.
Crypto Can’t Escape Labour Data Anymore
Bitcoin used to ignore traditional economic indicators. Not anymore. The asset class matured into something that responds to Fed policy, inflation data, and now labour markets.
This creates a paradox. Crypto needs rate cuts to rally. But rate cuts only happen when the economy weakens. If the economy weakens too much, crypto falls anyway due to risk aversion.
So there’s a narrow window where conditions align perfectly. The Fed cuts rates. The economy slows but doesn’t crash. Risk appetite remains intact. ETF flows turn positive.
That’s a lot of conditions to meet simultaneously. Historically, such windows don’t stay open long. Timing becomes everything.
December may offer that window. Or it may not. The answer depends on job market data we haven’t seen yet. Until then, crypto remains stuck in a high-stakes waiting game where macro signals drive everything.
Choose your positions carefully. This isn’t a market for complacency.