A “softening, not collapsing” jobs market meets a tired crypto rally
Bitcoin has been struggling to maintain its momentum in late November after reaching new highs earlier in 2025. Concurrently, US labor data is indicating a different kind of warning—not a job market crash, but a notable loss of momentum.
The US unemployment rate has increased from the low-3% range observed in 2022-2023 to the mid-4% area, marking its highest level in several years. Monthly nonfarm payroll gains have decreased from the post-pandemic highs to more modest six-figure increases. Job openings and employee turnover have also fallen from their peaks in 2021-2022, as reported by the Bureau of Labor Statistics (BLS) and Federal Reserve Economic Data (FRED).
For equities, bonds, and foreign exchange, this is familiar territory. Softer labor data often leads to quick adjustments in growth expectations and central bank policies.
Crypto now finds itself entangled in the same macro web. Rather than a straightforward cause-and-effect relationship, the connection is better understood as follows: changes in the labor market influence risk appetite and liquidity conditions, which are frequently reflected in Bitcoin (BTC) and broader crypto prices.
Why labor data matters for risk assets in the first place
Every month, traders globally pause for the U.S. Employment Situation Report, which compiles nonfarm payroll data from the BLS. The headline figures are straightforward: the number of jobs added, the unemployment rate, wage growth, and labor force participation.
However, beneath the surface, this data acts as a proxy for something larger: the health of the US consumer and the likelihood of a recession. Strong job growth and low unemployment indicate households have disposable income to spend, bolstering corporate earnings and credit quality. Conversely, weak figures suggest the opposite.
For macro markets, the jobs report also directly affects Federal Reserve expectations. If labor data remains robust while inflation persists, investors infer that interest rates may stay elevated for an extended period. If the unemployment rate rises and payroll growth diminishes, the argument for rate cuts gains traction.
Crypto now operates within this same ecosystem. Bitcoin and major altcoins are widely held by macro funds, exchange-traded funds (ETFs), and retail traders who are also monitoring stocks and bonds. Consequently, a weakened labor market can elicit two contradictory effects simultaneously:
It raises concerns about a slowdown or hard landing, which typically drives investors away from high-beta assets.
Conversely, it enhances the likelihood of looser policy in the future, potentially supporting risk assets through lower yields and more lenient financial conditions.
The crucial point is that labor data influences expectations and probabilities, but it’s not a definitive determinant of where Bitcoin “should” trade next.
Did you know? “Nonfarm payrolls” gauge the number of jobs added or lost across most of the US economy, excluding agricultural work and a few minor sectors. It represents the most-watched snapshot of America’s labor market.
Two main channels from a weaker jobs market to crypto
When analysts discuss labor market pressures on Bitcoin and crypto, they often refer to two overlapping channels.
The first is the growth channel. Rising unemployment, slower hiring, and diminishing wage growth lead to heightened caution regarding future earnings and default risks. In this climate, investors typically reduce exposure to the more speculative segments of their portfolios, such as small-cap stocks, high-yield credit, and volatile assets like Bitcoin and altcoins. Crypto, particularly outside of BTC and Ether (ETH), continues to be viewed as a high-beta segment of the risk spectrum.
The second is the liquidity and rates channel. The same weak data that unsettles investors may prompt central banks towards easier monetary policy. If markets begin to price in multiple rate cuts, real yields could decline, the dollar might weaken, and global liquidity could increase. Several macro studies and digital asset research organizations have indicated that phases of rising global liquidity and decreasing real yields often coincide with enhanced Bitcoin performance, although the correlation is not perfect.
Macro strategists increasingly describe Bitcoin as an asset whose function shifts according to the prevailing economic regime. At times, it behaves like a high-growth tech stock; at other times, as a macro hedge. Around labor report releases, a common pattern is a short-lived risk-off reaction to disappointing data, followed by a partial recovery as narratives of rate cuts and ETF inflows gain momentum.
What the current US labor trends are really saying
To grasp the current pressures on crypto, it’s useful to look beyond a single unemployment rate.
Recent BLS reports reveal an economy that is still creating jobs but at a slower rate than during the post-pandemic surge. Payroll growth has decelerated, the unemployment rate has risen, and survey data shows fewer Americans considering jobs plentiful while more express difficulty in securing employment.
The breakdown by sector is also crucial. A significant proportion of the recent job gains has originated from relatively stable sectors like health care and government, as well as services like leisure and hospitality. In contrast, more cyclical or goods-producing sectors, such as manufacturing, certain construction segments, and interest rate-sensitive corporate industries, have shown weakness across various metrics.
Leading indicators confirm this cooling trend. Job openings and quits, tracked through the Job Openings and Labor Turnover Survey (JOLTS), are significantly below their peaks. Workers are changing jobs less frequently, indicating that bargaining power has diminished since the hyper-competitive conditions of 2021-2022.
This mixed bag of labor signals has left analysts pondering whether the US is on course for a soft landing or something bumpier. Such uncertainty can drive more conservative positioning across risk assets, including hesitance to chase Bitcoin to new highs following a strong rally.
Did you know? Economists sometimes refer to current conditions as a “Schrödinger’s labor market,” as the data simultaneously presents two narratives. Unemployment is rising while the economy continues to create jobs. It remains neither clearly strong nor weak, with both scenarios coexisting until a definitive trend emerges.
How crypto has traded around recent job surprises
Recent trading around monthly job reports provides a valuable, if imperfect, insight into these dynamics.
Several times over the past couple of years, weaker-than-expected payrolls or unexpected rises in the unemployment rate have followed a recognizable pattern. A study revealed that Bitcoin’s average movement was approximately +0.7% when payrolls exceeded forecasts and around -0.7% when they fell short, indicating that traders do reduce high-beta exposure when employment figures disappoint.
In the minutes and hours following the release, headline-driven algorithms and fast-money traders often sell off equities and crypto as slowdown headlines circulate. Following the delayed September 2025 report, for instance, BTC surged toward the low $90,000s before dropping into the mid $80,000s, leading to over $2 billion in liquidated crypto positions, including nearly $1 billion in Bitcoin longs.
As the initial commotion settles, focus shifts to the rates market. If futures and swaps start to indicate more aggressive Fed cuts following disappointing data, longer-term yields may drop. During some of these instances, Bitcoin has stabilized or partially recovered in subsequent sessions as investors turn back to duration and high-beta assets. In other scenarios, especially when labor weakness coincides with banking tensions or geopolitical disturbances, risk-off sentiment takes precedence and crypto experiences prolonged downturns.
Experts from both traditional macro research firms and crypto-native companies emphasize that ETF flows, stablecoin liquidity, on-chain activity, and specific news events like protocol updates or exchange issues can easily overshadow any individual data release. In other words, while labor data is significant, it exists alongside numerous crypto-specific influences.
What crypto investors should watch in the labor data cycle
For investors aiming to comprehend these correlations without treating them as a strict trading manual, a straightforward macro dashboard can be quite beneficial.
Key indicators include:
Headline payrolls and the unemployment rate: These are essential components of the monthly Employment Situation report. Prolonged rises in unemployment alongside decreasing payrolls typically signal a more significant cooling trend.
Wage growth and hours worked: These metrics reflect household income and spending power, which ultimately shape growth expectations and the Fed’s inflation outlook.
JOLTS data including openings, quits, and hires: High openings and quits indicate a tight market; declines signal easing labor demand and reduced worker confidence.
Weekly jobless claims: A more frequent series that many macro and quant funds utilize as an early warning for shifts in the labor market.
Different combinations yield varied signals. A soft yet stable jobs backdrop with diminishing inflation provides the Fed with room for gradual easing, a scenario that often tends to be more favorable for risk assets. A rapid increase in unemployment, accompanied by declining openings, heightens the risk of a sharper downturn, wherein investors might favor cash, Treasurys, and defensive assets.
For Bitcoin and crypto, the takeaway is not merely that weak labor translates to lower prices; instead, labor data plays a significant role in setting the macroeconomic landscape. It influences growth expectations, interest rate trajectories, and liquidity, which in turn affect the level of risk investors are willing to undertake.
