The crypto markets has faced significant turbulence in recent days as stronger-than-expected U.S. economic data dampened hopes of Federal Reserve rate cuts in 2025. Bitcoin and altcoins have experienced sharp declines, reflecting broader investor unease across asset classes.
U.S. Jobs Report Exceeds Expectations
In December, the U.S. economy added 256,000 jobs, far surpassing the anticipated 160,000 and marking an increase from November’s revised figure of 212,000. Additionally, the unemployment rate unexpectedly dipped to 4.1% from 4.2%. This robust labour market data signals sustained economic momentum, complicating expectations of monetary easing.
Impact on Crypto Markets
Bitcoin (BTC) saw a sharp decline, dropping over 2% immediately after the report’s release, trading near $92,800. Earlier in the week, bitcoin plummeted from almost $103,000 on Monday to below $92,000 on Thursday. Major altcoins fared even worse, experiencing larger percentage losses as market sentiment soured.
The stronger economic data stoked fears of persistent interest rate hikes, prompting a sell-off in high-risk assets like cryptocurrencies.
Traditional Markets Also React
The effects of the jobs report were not confined to crypto. U.S. stock index futures dipped about 1%, while the 10-year Treasury yield surged by nine basis points to 4.78%. The dollar index rose by 0.6%, and gold prices edged lower to under $2,700 per ounce.
These movements suggest a broad-market reassessment, with investors pricing in fewer Federal Reserve rate cuts than previously expected.
Rate Cut Expectations Dwindle
The December jobs data has significantly altered the outlook for Federal Reserve monetary policy in 2025. CME FedWatch data shows the probability of a March rate cut dropping to 28%, down from 41% before the report. Similarly, the odds of a May rate cut have fallen from 44% to 34%.
Investors are now bracing for the possibility that the Fed may hold rates higher for longer, a scenario that could continue pressuring crypto markets.
