U.S. Employment Data Falls Far Below Expectations

The ADP private-sector employment data for November missed market forecasts by a wide margin. While economists expected an increase of around 10,000 jobs, the report instead showed a decline of 32,000. This is seen as one of the clearest indicators that the U.S. labor market is cooling rapidly.

Due to disruptions related to the government shutdown, economic data has been limited in recent weeks, prompting the Fed to give greater weight than usual to the ADP report. As a result, such a weak outcome has had a significant impact both on markets and policymakers.

Is the Fed Running Out of Room to Maneuver?

According to experts, the weak employment data is making it increasingly difficult for the Fed to resist mounting risks. Economists say that a rate cut at the December 10 meeting is now a high-probability scenario. This expectation has been rapidly priced in not only in macro markets but also in the crypto sector.

Financial firm Kobeissi summarized the situation briefly:

“With the labor market deteriorating this quickly, the Fed has no choice but to cut rates.”

This narrative and data flow also translated directly into crypto markets. As rate cut expectations surged, Bitcoin saw a notable intraday rebound. Investors began repositioning, anticipating that looser monetary policy will increase liquidity—benefiting Bitcoin.

Fed Members’ Recent Statements Reinforce Rate-Cut Prospects

In recent months, statements from Fed officials have increasingly focused on labor market weakness rather than high inflation. Officials have repeatedly noted that while inflation is moving along a more predictable path, employment is deteriorating faster than expected.

The unemployment rate rising to 4.4% shows policymakers have shifted to a more cautious stance regarding labor market risks. Officials warn that continued weakness could lead to a sharper slowdown in economic activity. As a result, the tone within the Fed has become noticeably more dovish, strengthening expectations of a rate cut.

FedWatch: Cut Probability at Recent Highs

The Chicago Mercantile Exchange’s (CME) FedWatch tool, a key gauge of market expectations, shows that the probability of a 25 bps rate cut has risen to 89%. Just a few weeks ago, this probability was below 30%. The rapid surge underscores how powerful and immediate the impact of new macro data has been on market sentiment. Investors increasingly believe that accelerating labor market weakness is forcing the Fed toward easing, and FedWatch data reflects how quickly this view has solidified.

Conclusion

Taking the latest data and market pricing together, the likelihood of a Fed rate cut now rests on a much firmer foundation. Weak job numbers, clear labor market cooling, rising recession signals, and dovish commentary from Fed members have turned the December 10 meeting into a critical turning point. Markets believe the Fed is preparing to shift away from aggressive tightening and enter a new rate-cutting cycle.

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O’Leary pointed out that there is “a lot of inflation in the system.” The annual inflation rate in September reached 3%, the highest since January.

He added, “The Fed has a dual mandate: full employment and inflation. Tariffs are taking effect, and input costs are increasing.”

Market participants, however, have pushed the probability of a December rate cut to 88.1% according to CME FedWatch. Still, O’Leary said this scenario does not support Bitcoin. He believes Bitcoin currently shows no clear short-term direction, and Fed decisions have limited impact on the price.

O’Leary stated that Bitcoin has found a level for now and is likely to fluctuate within a narrow range. Without a strong catalyst, he expects the price to move only within a 5% range. According to Binance, Bitcoin was trading around $93,200 at the time of the report.

“I think the price will drift within roughly 5% of its current level in either direction, but I don’t see a strong upside catalyst,” O’Leary added.

Volatile expectations ahead of December Fed meeting

Expectations for a December rate cut have fluctuated sharply in recent weeks. On November 19, the probability of a rate cut dropped to 33%, while in the first week of November it was around 67%.

This shifted rapidly after New York Fed President John Williams said a rate cut could occur “in the near term.” Following his comments, the probability rose to 69.4% within two days.

Following the rate cuts in September and November, markets broadly expected the Fed to end the year with another easing step. However, O’Leary’s comments highlight that crypto investors should not rely too heavily on macro data when pricing Bitcoin.

Bitcoin’s short-term outlook remains stable, while rate speculation continues to support volatility in the market. As noted, the next Fed meeting is scheduled for December 9, and the decision is expected to reshape market expectations.

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According to data provided by the CME FedWatch tool, the target rate range could be lowered to 350–375 basis points, while the likelihood of keeping the current policy range of 375–400 basis points stands at 29%.

This article may also catch your attention: Bitcoin (BTC) Recovery Gains Strength: Will the Uptrend Continue?

Factors Strengthening Expectations

Statements made by New York Fed President John Williams indicate that short-term adjustments to interest rates may be possible, further boosting market expectations of a rate cut.

Data flow disruptions in the United States are creating uncertainty in the FED’s decision-making process. Although recent minutes suggest differing views within the Fed regarding a potential rate cut, the overall sentiment points toward a policy easing at the final meeting of the year.

A higher probability of a rate cut has positively reflected on Bitcoin and altcoin markets, increasing appetite for risk assets. However, market participants remain cautious in light of possible surprises from the Federal Reserve.

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Crypto and stock markets are focused on the signals that will come from this announcement. The potential end of quantitative tightening (QT) is particularly critical. Bitcoin, having filled its CME gap, could potentially rebound toward $120,000. Today is an important day as the Fed rate decision will be revealed.

Jerome Powell’s Speech: More Important Than the Rate Decision

After September’s 25-basis-point rate cut, FOMC officials indicated openness to further reductions. Powell stated that rate decisions will be taken on a meeting-by-meeting basis, depending on labor market conditions.

He also emphasized that the Fed’s QT program should end soon. Amid the ongoing U.S. government shutdown and limited economic data, investors are closely monitoring these remarks. September’s CPI data showed lower-than-expected declines in headline and core inflation, but annual CPI rose from 2.9% to 3%.

CME FedWatch data suggests that investors expect a 25-basis-point rate cut in December, signaling potential volatility for crypto markets.

Crypto Market and Bitcoin: What to Expect from the FOMC

According to popular analyst Michael van de Poppe, while a 25-basis-point Fed rate cut is likely, crypto volatility may surge today. Investors should avoid excessive leverage as prices could move sharply in either direction.

Bitcoin still presents valuable opportunities compared to other assets. Buying near the $112,000 dip is considered a strong entry point. Post-FOMC, BTC could gain momentum toward $123,000.

Key points for crypto investors today:

• Monitor BTC and altcoin price movements starting at 2:00 PM ET

• Analyze Jerome Powell’s guidance during the press conference

• Take precautions against volatility when using leverage

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Markets rallied on Friday after Fed Chair Jerome Powell’s remarks at the Jackson Hole symposium. Powell suggested that the first rate cut of 2025 could be considered in September. Investor sentiment quickly shifted to greed following his dovish tone. 

Santiment Warns of Growing Market Euphoria 

Santiment highlighted that excessive optimism often signals local tops. The firm noted that such a large spike in social discussions around a single bullish narrative indicates rising risk. Analysts remain divided on the potential outcome. 

Powell stated that current inflation and labor market conditions may justify a shift in monetary policy. Data from the CME FedWatch Tool shows that 75% of market participants expect a cut in September. However, some experts urge caution despite market enthusiasm. 

Analysts Split on Crypto Market Outlook 

Crypto trader Ash Crypto argued that two rate cuts in Q4 could unlock “trillions flowing into crypto.” He predicted a parabolic phase with altcoins gaining 10x to 50x in value. 

Meanwhile, Markus Thielen, head of research at 10x Research, warned in April that Bitcoin could face short-term pressure. He pointed to recession fears as a possible headwind despite long-term opportunities. 

On the other hand, network economist Timothy Peterson noted in March that if the Fed delays cuts in 2025, a broader crypto market downturn could follow. In the end, the market’s direction hinges heavily on the Fed’s September decision. 

Finally, Santiment emphasized that while optimism dominates, the surge in social media discussions reflects a need for caution. This highlights the importance of staying measured as the market enters a critical phase. 

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