Red-Hot Warning Signal for Bitcoin: Bull Market End?

Labor Market Warning Signs Flash Red for Bitcoin

A new composite labor market indicator, constructed from layoff notifications, job vacancy data, corporate warnings, and references to layoffs in quarterly reports, shows the U.S. labor market is turning. The indicator, which has been well below zero (positive) in recent years, is now moving rapidly toward neutral. This could have enormous consequences for the Bitcoin price.

'Recent alternative data also point to a new risk of rising layoffs,' noted financial analyst Mike Zaccardi, CFA, CMT, in a recent tweet referencing Goldman Sachs research. The data shows companies are giving multiple signals of scaling back across various fronts.

Broad Increase in Layoff Signals

According to the composite indicator, references to layoffs in quarterly earnings commentary are increasing. WARN notifications (mandatory layoff notices), announced reorganizations, and reported layoffs via JOLTS data are also rising. While unemployment claims remain lagging, economists note this is typical—claims often react last when the labor market turns.

Combined with other stress points—rising credit card and auto loan delinquencies, pressure on commercial real estate, and bankruptcy levels approaching a 15-year record—a clearer picture emerges of an economy where higher interest rates are finally taking effect.

The Phase Where Companies Stop Holding On

In recent years, employers preferred to hold onto staff rather than having to re-post vacancies. Now, as demand weakens and costs rise, that pattern is beginning to shift. If the indicator moves above zero and stays there, historically that's the point where the conversation in Washington, on Wall Street, and in business shifts from 'the labor market is resilient' to 'the labor market is cooling.' That phase now appears to be slowly coming into view.

Impact on Bitcoin's Price Trajectory

A turning labor market can affect the crypto market in two key ways:

Short-Term: Risk-Off Pressure

When layoffs increase and consumer spending slows, risk-averse behavior typically rises. This often has a negative impact on risk investments, including Bitcoin. Position unwinding, lower liquidity, and a potentially weaker stock market can create temporary downward pressure.

Medium-Term: Potential for Easing

If the cooling persists, the likelihood grows that the Federal Reserve will need to ease monetary policy faster or more aggressively. This could ultimately prove positive for Bitcoin, which historically responds strongly to periods of accommodative monetary policy.

The crucial factor remains timing: the labor market turns early in the cycle, but monetary support usually follows much later. This means Bitcoin could see both extra volatility and opportunities emerge in the interim.

Market Context and Expert Perspectives

Bitcoin has fallen nearly 30% from its October all-time highs, trading around $90,000 as of early December 2025. The Federal Reserve's upcoming interest rate decision on December 10, 2025, is widely anticipated, with markets pricing in a 90% probability of a 25-basis-point cut. While such cuts typically boost risk assets, the Fed's accompanying statement and forward guidance will be equally important for market direction.

'The Fed's tone in its accompanying statement is equally important - a dovish stance could push Bitcoin toward $100,000, while hawkish commentary might drive prices below $85,000,' according to analysis from The Motley Fool.

Historical patterns show Bitcoin has demonstrated strong correlations with traditional market sentiment and liquidity conditions. During 'risk-on' environments, cryptocurrencies show stronger positive correlations with traditional markets, though traditional economic indicators have proportionally less influence compared to technology developments and market-specific events.

What Comes Next?

The composite labor market indicator isn't yet in the 'red' zone, but the direction is clear. The labor market is beginning its turn, cautiously but inevitably. And as in previous cycles, the rest of the macroeconomic data will eventually follow this path.

For Bitcoin investors, this creates a complex landscape of both risks and opportunities. Short-term volatility may increase as risk appetite wanes, but medium-term prospects could improve if monetary policy responds to economic cooling. The key will be navigating the timing mismatch between labor market deterioration and potential Fed easing.

As one market observer noted, 'Crypto now trades within the same macro ecosystem as traditional assets, responding to shifts in risk appetite and liquidity conditions driven by labor market signals.' This interconnectedness means Bitcoin's fate remains tied to broader economic trends, even as it continues to evolve as a distinct asset class.