Crypto markets have experienced significant losses in recent days as stronger-than-expected economic data led to a rise in interest rates, casting doubt on the Federal Reserve’s plans to continue easing monetary policy.
The U.S. job market showed unexpected strength in December, with job growth surpassing forecasts and the unemployment rate dropping. According to the Bureau of Labor Statistics, the economy added 256,000 jobs last month, significantly exceeding the anticipated 160,000 and marking an increase from the revised 212,000 jobs added in November (originally reported as 227,000).
The unemployment rate fell to 4.1% in December, better than the forecasted 4.2% and down from November’s 4.2%.
Bitcoin (BTC), which had been trying to recover from steep declines earlier in the week, dropped over 2% following the jobs report, falling to $92,800.
This data came after a series of other economic reports triggered a broad market pullback, with investors revising their expectations of continued Federal Reserve rate cuts in 2025. Crypto markets, which had been performing strongly, were hit particularly hard by the selloff. Bitcoin plummeted from nearly $103,000 on Monday to below $92,000 by Thursday, while major altcoins saw even steeper declines.
Traditional markets also reacted, with U.S. stock index futures down about 1% after the jobs report. The bond market saw the most significant reaction, with the 10-year Treasury yield rising by nine basis points to 4.78%. The dollar index gained 0.6%, while gold saw a slight dip, dropping just below $2,700 per ounce.
Traders are now scaling back their expectations for further Federal Reserve rate cuts in 2025. The probability of a rate cut in March fell to 28% from 41% before the report, and the chances of a rate cut in May dropped from 44% to 34%, according to CME FedWatch data.
In other report highlights, average hourly earnings rose by 0.3% in December, matching forecasts but lower than November’s 0.4% increase. On a year-over-year basis, hourly earnings were up 3.9%, slightly missing expectations of a 4% rise and lower than November’s 4% growth.
