The weakening US labour market is emerging as a major risk variable for crypto heading into December and early 2026. Rising layoffs, slowing hiring, and deteriorating consumer confidence have intensified expectations of a Federal Reserve rate cut. 

The shift could influence Bitcoin and Ethereum more sharply than equities due to fragile liquidity conditions across digital assets.

Layoff announcements surged in October to their highest level since 2003. Several large employers cut jobs or froze hiring, reflecting tariff costs, AI restructuring, and post-shutdown uncertainty. 

Consumer confidence also fell in November as job insecurity increased.

Alternative data shows US layoffs are surging:

Job cuts tracked by MacroEdge jumped +70,609 MoM in October, to 154,559, the highest in at least 2 years.

Monthly job cuts have now exceeded 100,000 for the 5th time this year.

At the same time, layoff announcements compiled by… pic.twitter.com/zLRiMebfi5

Despite these pressures, weekly jobless claims remain low. Markets interpret this mixed picture as a sign that the economy is softening but not collapsing. 

As a result, traders now expect a 25-basis-point rate cut at the December meeting. Futures markets price a significant easing for 2026.

A December cut would mark a sharp pivot from the Fed’s earlier “higher for longer” stance. It would also signal that the central bank is responding to labour-market weakness before broader damage spreads.

Bitcoin and Ethereum still operate in thin liquidity after the October 10 liquidation shock. Market makers reduced risk inventories, leaving order books with less depth. 

Tom Lee described the market as “limping” for six weeks due to damaged liquidity capacity.

These conditions increase the impact of macro shifts. When liquidity is thin, changes in interest-rate expectations typically move crypto faster than equities. 

This dynamic was clear during November, when ETF outflows and selling pressure pushed Bitcoin down nearly 30% from its October peak.

On-chain metrics now show signs of stabilisation. The 90-day Taker CVD has moved from persistent selling to neutral, indicating seller exhaustion. 

At the same time, users are borrowing against Bitcoin rather than selling it, which reduces immediate supply pressure but increases latent liquidation risk.

A December rate cut would reduce real yields and inject liquidity into risk assets. Bitcoin historically rallies during such conditions, especially after deep drawdowns. 

Several metrics already point to improving momentum. Fear and Greed Index readings lifted from 11 to 22. Average crypto RSI rose toward 60 after touching oversold levels earlier in the month. MACD also turned positive.

🔴Record layoffs in the US

US companies cut 153,000 jobs in October, 175% more than a year ago. That makes October the worst in 20 years and the rate the highest for the fourth quarter since 2008🗓

For the crypto market, this creates a double effect: on the one hand, a… pic.twitter.com/LcAcbjwhFk

However, ETF flow data remains uncertain. November saw heavy outflows, though recent days show tentative inflows. 

If ETF demand returns, thin liquidity could amplify upside moves. If outflows resume, the market could revisit recent lows.

Macro signals will therefore dominate crypto into year-end. A dovish Fed stance may trigger a rally similar to 2023. 

A hawkish tone could undermine the current recovery and reinforce the bearish trend seen in November.

Binance Bitcoin & Ethereum Exchange Inflow Value Is Structurally Elevated

“This often aligns with phases of rotation rather than pure accumulation. Large players move size onto the exchange, giving the market more room for distribution.” – By @TeddyVision pic.twitter.com/wnpOWkyhPL

Even if crypto rallies in December, January remains uncertain. The combined October–November employment report arrives on December 16. The release may confirm deeper labour stress not yet captured in weekly data.

If layoffs accelerate into January, risk assets may weaken. Markets could interpret labour deterioration as a sign of recession. 

In that scenario, rate cuts may not offset broad risk aversion. Bitcoin often reacts first in such conditions due to its liquidity profile.

Alternatively, if the report shows moderate softness with stable wage growth, markets may price a controlled slowdown. 

This would support a continuation of any December rally into early 2026. In both cases, liquidity conditions will govern the scale of price swings.

With momentum improving and liquidity still thin, the market remains primed for a significant move. The direction will be set by how the Federal Reserve responds to growing labour-market pressure and how investors interpret the broader economic signal in the weeks ahead.

The post US Job Market Crisis Raises Stakes for Crypto Prices in December and January appeared first on BeInCrypto.

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