How the soft U.S. labor market puts pressure on the Crypto Assets market

Author: Bradley Peak, Source: Cointelegraph, Translated by: Shaw Jincai Finance

1. The job market is “soft rather than collapsing”, and the crypto market shows signs of fatigue.

After reaching a new high in 2025, Bitcoin has struggled to maintain its upward momentum for several weeks in late November. Meanwhile, data from the U.S. labor market has begun to emit another warning, not of a sudden drop in jobs, but of a clear cooling.

The unemployment rate in the United States has risen from about 3% in 2022-2023 to around 4%, reaching its highest level in recent years. Data from the U.S. Bureau of Labor Statistics (BLS) and the Federal Reserve Economic Data (FRED) series show that the monthly growth in non-farm payrolls has slowed from post-pandemic levels to a more moderate six-digit increase. Job vacancies and the number of resignations have also declined from their peaks in 2021 to 2022.

U.S. employment rate

This has become a common occurrence for the stock, bond, and foreign exchange markets. Weak labor market data often quickly adjusts expectations for economic growth and affects central bank policies.

Today, cryptocurrencies are also situated within the same macroeconomic network. Rather than simply explaining their relationship through causality, it is better to understand it this way: changes in the labor market can affect risk appetite and liquidity conditions, and these changes often reflect in the price trends of Bitcoin and the broader cryptocurrency market.

2. Why is labor data crucial for risk assets?

Every month, traders around the world stop what they're doing to wait for the non-farm employment situation report released by the U.S. Bureau of Labor Statistics (BLS). The main data in this report is concise and clear: the number of new jobs added, the unemployment rate, wage growth, and the labor force participation rate.

Overview of Employment Situation in November

The data behind this reflects deeper issues: the health status of American consumers and the possibility of economic recession. Strong job growth and low unemployment rates indicate that household income is sufficient for consumption, which can support corporate profits and credit quality. Weak data, on the other hand, suggests the opposite situation.

For the macro market, employment data directly impacts expectations regarding the Federal Reserve. If labor market data remains stable while inflation remains high, investors will infer that interest rates may stay elevated for a longer period. If the unemployment rate rises and non-farm job growth slows, the rationale for interest rate cuts will strengthen.

Nowadays, cryptocurrencies are also traded within the same ecosystem. Bitcoin and mainstream altcoins are widely held by macro funds, exchange-traded funds (ETFs), and retail investors who are simultaneously focused on stocks and bonds. Therefore, a weakening labor market could have two completely opposite effects at the same time:

• This has raised concerns about an economic slowdown or hard landing, which usually prompts investors to sell off high beta assets.
• This also increases the possibility of future policies tending towards easing, ultimately supporting risk assets by lowering yields and relaxing the financial environment.

The key is that labor data will affect expectations and probabilities, but it does not “mechanically” determine the next trading direction of Bitcoin.

3. Two Major Channels Through Which a Weak Job Market Affects Cryptocurrency

When strategists talk about the pressures of the labor market on Bitcoin and cryptocurrency, they typically describe two overlapping channels.

First is the growth channel. The rising unemployment rate, slowing recruitment, and weak wage growth have made the market more cautious about future profits and default risks. In such an environment, investors typically reduce the riskiest portions of their portfolios, such as small-cap stocks, high-yield bonds, and more volatile assets like Bitcoin and altcoins. Cryptocurrencies, especially those other than Bitcoin and Ethereum, are still seen as a corner of the risk spectrum with a high beta coefficient.

Secondly, it is the liquidity and interest rate channels. Weak economic data may trigger investor panic and prompt central banks to adopt loose monetary policies. If the market begins to anticipate multiple rate cuts, real yields may decline, the dollar may weaken, and global liquidity may expand. Some macroeconomic research and digital asset research institutions point out that periods of rising global liquidity and declining real yields often coincide with periods of strong Bitcoin performance, although this correlation is far from perfect.

Macroeconomic strategists are increasingly inclined to describe Bitcoin as an asset whose role changes with the market environment. Sometimes, it behaves like a high-growth tech stock; at other times, it plays the role of a macro hedging tool. Commonly seen around the release of labor market data is the following scenario: in the case of poor data, there is a short-term volatility in risk aversion; subsequently, as expectations for interest rate cuts and inflows of ETF funds recover, the market may experience a partial rebound.

4. What Do Current Trends in the U.S. Labor Market Actually Mean?

To understand the pressure cryptocurrencies are facing today, one cannot just look at a single unemployment rate figure.

The recent report from the U.S. Bureau of Labor Statistics (BLS) shows that the economy is still adding jobs, but the growth rate has fallen below the prosperous period after the pandemic. The increase in employment has slowed down, the unemployment rate continues to rise, and survey data indicates that fewer Americans believe there are ample job opportunities, while more feel that jobs are hard to find.

Industry segmentation is also very important. Recent new job positions mainly come from relatively stable sectors such as healthcare and government, as well as service industries like leisure and hospitality. In contrast, cyclical industries, such as manufacturing, certain construction sectors, and those sensitive to interest rates, have underperformed across various indicators.

Leading indicators also corroborate this cooling trend. The number of job openings and separations tracked in the Job Openings and Labor Turnover Survey (JOLTS) is significantly lower than peak levels. The frequency of employee turnover has decreased, indicating that the strong position of the labor market has waned from the heated state of 2021 to 2022.

A series of mixed signals regarding labor employment have sparked ongoing debates in the market about whether the U.S. economy will achieve a smooth soft landing or encounter more turbulence. This uncertainty alone may prompt investors to adopt a more conservative strategy in their allocation of risk assets, including reluctance to chase after Bitcoin after it has experienced a strong rally.

5. How Cryptocurrency Is Affected by Recent Changes in Employment Trends

Recent trading conditions surrounding the monthly employment data releases, while not perfect, provide a useful window for understanding these dynamics.

In recent years, it has been common for non-farm payroll data to fall short of expectations or for the unemployment rate to unexpectedly rise, exhibiting a familiar pattern. A study found that when non-farm payroll data exceeds expectations, Bitcoin's average increase is about 0.7%, while when non-farm payroll data falls below expectations, Bitcoin's average decrease is about 0.7%. This indicates that when employment data is disappointing, traders do indeed reduce their investments in high beta assets.

Within minutes and hours after data is released, algorithmic trading and day traders often sell off stocks and cryptocurrencies driven by news headlines of economic slowdown. For instance, around the time the report was delayed in September 2025, the price of Bitcoin surged to around $90,000, before falling back to the mid-$80,000s, with over $2 billion in cryptocurrency positions liquidated, including nearly $1 billion in Bitcoin long positions.

After the dust settles, the market focus shifts to the interest rate market. If weak economic data triggers expectations for a larger rate cut by the Federal Reserve in futures and swap contracts, long-term yields will decline. In some cases, as investors revert to longer-duration and higher-beta assets, Bitcoin may stabilize or partially rebound in the following trading days. However, in other cases, especially when a weak labor market is accompanied by banking pressures or geopolitical shocks, risk-averse sentiment dominates, and the extreme volatility of cryptocurrencies may persist for a longer time.

Analysts from traditional macro research firms and cryptocurrency-native companies emphasize that specific news such as ETF fund flows, stablecoin liquidity, on-chain activity, and protocol upgrades or exchange issues can easily overshadow any single data release. In other words, while employment data is important, it is just one of many cryptocurrency-specific drivers.

6. Key Points of Labor Data Cycles That Cryptocurrency Investors Should Focus On

For investors who want to understand these correlations but do not wish to treat them as trading rules, a simple macro dashboard can play a significant role.

The main content includes:

• New Employment Figures and Unemployment Rate: These two components form the core of the monthly employment situation report. A rising unemployment rate coupled with slowing new employment figures usually indicates a trend of economic cooling.
• Wage Growth and Working Hours: These reflect household income and purchasing power, which in turn affect economic growth expectations and the Federal Reserve's forecasts for inflation.
• JOLTS data such as job openings, resignations, and hiring numbers: High job openings and resignation rates indicate a tight labor market; a decrease suggests a slowdown in labor demand and lack of confidence.
• Weekly Initial Jobless Claims: Many macro and quantitative funds use this high-frequency series as an early warning signal for changes in the labor market.

Different combinations convey different signals. The employment situation is stable and moderate, and inflation is easing, which provides space for the Federal Reserve to gradually loosen monetary policy. This situation is generally more favorable for risk-sensitive assets. However, a rapid rise in unemployment and a decrease in job vacancies increase the risk of a sharp economic downturn, in which case investors may be more inclined to hold cash, government bonds, and defensive assets.

For Bitcoin and cryptocurrencies, the key is that a weak labor market means lower prices, and labor data helps predict the macroeconomic situation. This data affects growth expectations, interest rate trends, and liquidity, which in turn influences the level of risk investors are willing to take.