US Jobless Claims Drop Unexpectedly: Crypto Market on Edge
The US labor market continues to surprise, with the latest jobless claims report revealing an unexpected drop. Against the backdrop of a strong labor market, the number of Americans filing new applications for jobless benefits declined significantly last week, sparking a bearish sentiment in the crypto market.
As the crypto market braces for potential volatility, experts are closely watching potential movements in the space. With the market historically sensitive to such macroeconomic developments, this new data is poised to have far-reaching implications.
US Jobless Claims Report Out with Surprise Decline
According to the latest Reuters report, the US Labour Department’s weekly report showed a surprise drop in initial unemployment claims. Reportedly, the claims fell by 10,000 to 214,000 for the week ending December 20.
Notably, this figure was below market expectations of 224,000. Claims have been volatile due to seasonal fluctuations around the Christmas holidays. But the four-week moving average also decreased by 750 to 216,750. The labor market is now characterized as “no hire, no fire,” with low layoffs but sluggish hiring.
However, continuing claims rose to 1.923 million, up from 1.885 million the previous week. Despite the drop in initial claims, the unemployment rate increased to 4.6% in November, the highest in about four years, up from 4.4% in September. The US economy added 64,000 jobs in November, a rebound from the 105,000 job loss in October.
Crypto Market Braces for Volatility
The recent drop in US initial jobless claims below the expected range signals a strong labor market. This unexpected decline indicates an overall positive outlook for the US economy, potentially boosting consumer spending and economic growth. A lower-than-expected reading usually strengthens the US dollar, thus weakening risky assets such as cryptocurrencies.
This data could also impact the Federal Reserve’s potential decisions on rate cuts. As the labor market seems stronger than in the previous weeks, which forced the central bank to reduce the rate three times in 2025, a potential rate cut is unlikely. This estimation could be a negative catalyst for the crypto market, as the Fed’s hawkish stance could send cryptocurrencies’ prices down.
However, given yesterday’s strong Q3 GDP report, the Fed is more likely to hold the interest rate steady at the current rate. The strong labor market data and GDP report reduce the likelihood of a rate cut, which could lead to decreased liquidity in the crypto market. But an unchanged rate could have a more neutral impact on the market.
Currently, the crypto market is down by 0.05%, reaching $2.94 trillion. Top cryptocurrencies like Bitcoin have fallen in response to the jobless claims report. As of press time, BTC is trading at $86,882, down by 0.19% in a day and 3.32% in a week. Ethereum, valued at $2,915, has plummeted by 0.51% over the past day and 3.4% over the past week.
Bitcoin and other cryptocurrencies could face increased downward pressure as investors reassess their expectations for monetary policy and liquidity. However, considering the unpredictable nature of the crypto market, it needs to be seen how this jobless claims report impacts the industry.
In conclusion, the latest US jobless claims data suggests a stronger-than-expected labor market, which could lead the Fed to maintain or increase current interest rates. This development is likely to impact the crypto market, particularly Bitcoin, which is poised to face increased volatility.
