The job market crisis in America increases risks for cryptocurrency in December and January?

The labor market in America is showing clear signs of weakening, becoming an important risk variable for the crypto market as it enters December and the beginning of 2026. The increasing layoff rate, slowing hiring pace, along with declining consumer confidence have raised expectations for the Federal Reserve of America (Fed) to cut interest rates.

These movements can have a strong impact on Bitcoin and Ethereum more than the traditional stock market, due to the liquidity conditions in the digital assets still being very fragile.

Pressure from the labor market and the Fed's response

In the past October, the number of layoff announcements in America surged, reaching its highest level since 2003. Many large corporations simultaneously cut down the whales or paused hiring, reflecting the impact of tariff costs, restructuring processes due to AI implementation, and the instability following lockdowns.

Consumer confidence continues to fall in November, as concerns about job safety become increasingly evident.

Despite facing considerable pressure, the number of weekly unemployment claims remains low. The market views this mixed picture as a sign that the economy in America is weakening, but has not yet fallen into crisis.

As a result, investors currently expect the Fed to cut interest rates by 0.25 percentage points at the December meeting, while the futures market also forecasts a strong easing trend in 2026.

If the Fed takes this action, it will be a major turning point compared to the previous stance of “keeping interest rates high for longer”, while also signaling that the central bank is proactively responding to signs of weakness in the labor market, in order to prevent widespread effects.

The likelihood of the Fed cutting down the whales in December | Source: CME FedWatch## Crypto: Highly sensitive to liquidity fluctuations

After the liquidation shock on October 10, Bitcoin and Ethereum are still operating in a weak liquidity environment. Market makers have cut down the whales they hold, causing the order book to become less deep.

Expert Tom Lee stated that the crypto market has been “lame” for the past six weeks due to impaired liquidity.

In this context, macroeconomic fluctuations have a significant impact. When liquidity is limited, changes in interest rate expectations often cause the crypto market to fluctuate faster and more violently than stocks.

This was clearly demonstrated in November, when selling pressure and the outflow of ETF capital pulled Bitcoin's price down nearly 30% from the peak in October.

On-chain indicators are now beginning to show signs of stability. The 90-day Taker CVD index has shifted from a continuous selling state to neutral, reflecting the exhaustion of sellers.

Notably, many investors choose to borrow against Bitcoin instead of selling, which helps to cut down the whales on immediate supply pressure but poses a risk of liquidation in the future.

December price increase prospects: Possible but not certain

If the Fed cuts interest rates in December, real yields will fall and liquidity will be added to risky assets. History shows that Bitcoin often rises sharply during such periods, especially after deep falls.

Many indicators have recorded positive signals: The Fear and Greed index increased from 11 to 22, the average RSI of the crypto market is approaching the 60 mark after previously falling into the oversold zone, and the MACD has also turned positive.

However, the ETF capital flow is still not really stable. November recorded a strong outflow of capital, although in recent days there are signs of capital flowing back in.

If ETF demand recovers, thin liquidity could lead to strong price increases. Conversely, if capital continues to flow out, the market may return to the recent bottom.

Therefore, macro signals will continue to dominate the developments in the crypto market until the end of the year. The Fed's dovish stance could trigger a similar bull run as in 2023, while a hawkish tone could weaken the current recovery and reinforce the downtrend of November.

Increased volatility risk in January 2026

Even if the crypto market grows in December, the outlook for January still carries a lot of uncertainties. The combined employment report for October–November will be released on December 16, which may reveal deeper labor stress not yet reflected in the weekly data.

If the wave of layoffs continues to rise sharply in January, risky assets are at risk of weakening. The market may see this as a sign of economic recession.

In this scenario, cutting down the whales may not be enough to soothe the risk-averse sentiment. Bitcoin often reacts first due to its liquidity characteristics.

Conversely, if the report indicates moderate weakness with stable wage growth, the market may price in a controlled slowdown.

This will support maintaining the upward momentum from December into early 2026. Regardless of the scenario, liquidity conditions remain the decisive factor for price volatility.

With the market momentum improving and liquidity still weak, the crypto market is facing a threshold of significant volatility. The upcoming direction will depend on how the Fed responds to labor pressure and how investors interpret macroeconomic signals in the coming weeks.

Mr. Teacher