Crypto Slides After Labor Data Weakens January Rate Cut Case

• Strong U.S. labor and trade data reduced rate-cut hopes, pressuring crypto prices.
• ETF outflows and futures liquidations amplified selling across Bitcoin and altcoins.
• Altcoins lagged as whales and options pressure hit ETH, SOL, and XRP levels failed.

U.S. labor and trade data released this week reshaped market expectations and quickly spilled into crypto prices. Significantly, initial jobless claims again undershot forecasts, while the trade deficit narrowed far more than economists expected. 

Together, the figures reinforced views that the U.S. economy retains momentum early in 2026. Consequently, traders reassessed the likelihood of near-term Federal Reserve rate cuts ahead of January’s policy meeting. Risk assets reacted swiftly, and cryptocurrencies moved lower following the release.

Bitcoin and major altcoins fell as stronger economic signals reduced hopes for looser monetary conditions. Besides macro pressure, fresh ETF outflows and derivatives activity added to the downside across digital assets.

Labor Strength and Trade Data Shift Rate Expectations

Initial jobless claims for the week ending January 3 totaled 208,000, below market estimates of around 210,000. Additionally, the prior week’s figure was revised upward to 200,000 from 199,000. The data suggested fewer layoffs and steady hiring conditions. Hence, labor resilience weakened arguments for imminent policy easing.

Meanwhile, October’s U.S. trade balance surprised markets. The deficit narrowed to $29.4 billion, far smaller than expectations of nearly $59 billion. Stronger exports and moderated imports supported the improvement. Collectively, the figures reinforced a narrative of economic stability rather than slowdown.

Bitcoin Slides as Institutional Flows Turn Negative

Bitcoin retreated following the data, briefly dipping below key psychological levels before stabilizing. The price traded near $89,364 during the session, down about 2.7% on the day. 

However, it still outperformed the broader crypto market’s decline. Additionally, Bitcoin maintained a modest weekly gain despite monthly weakness.

ETF activity weighed on sentiment. Bitcoin spot ETFs recorded roughly $398.85 million in net outflows. Consequently, institutional selling pressure intensified as macro conditions reduced expectations for rate relief. Moreover, traders appeared cautious ahead of upcoming economic releases and central bank guidance.

Altcoins Face Added Pressure From Derivatives and Whales

Ethereum underperformed Bitcoin as ETF flows reversed. U.S. spot ETH ETFs posted nearly $159.17 million in net exits. Additionally, large options expiries approached, with significant contracts clustering near the $3,100 level. The token traded near $3,076 after a daily drop exceeding 3.5%.

Elsewhere, Solana fell toward $133 despite strong weekly gains. XRP saw sharper losses of 6.4%. Whale transactions spiked to three-month highs, while price action failed to reclaim the $2.40 resistance. Consequently, markets reflected tighter financial expectations rather than renewed risk appetite.

Related: CPI Reduces Interest Rates Announcement Comes to Rescue Crypto