Key Insights
- •The crypto bull market may return sooner because unemployment is rising and hiring is slowing.
- •The U.S. jobs report points to higher chances of rate cuts as the economy cools.
- •Cheaper money has helped past crypto recoveries, and the same setup may form again.
Job Report Shows Stress: Crypto Bull Market Ahead?
The new U.S. jobs report indicates clear weakness in the labor market. The unemployment rate has risen to 4.4%, marking the highest level since late 2021. Furthermore, previous job numbers have been revised downward, and wage growth is lagging behind inflation.
When a jobs report appears weak, it often prompts the U.S. central bank to consider cutting interest rates. Lower interest rates make borrowing less expensive, which can stimulate economic activity.
Historically, a decrease in interest rates has been beneficial for the cryptocurrency market. While many indicators for Bitcoin are currently aligning with patterns seen near major market bottoms, this does not necessarily signal an immediate crypto bull market.
The report from the Bureau of Labor Statistics (BLS) highlights that the U.S. job market is experiencing a slowdown. Unemployment has climbed to 4.4%, a level not seen since late 2021. In September, the country added 119,000 jobs, but revisions for previous months indicated a net loss of 4,000 jobs.
The decline in job numbers is not an isolated incident, as June also saw job losses. This pattern suggests a broader trend of weakening employment.
Wages increased by 3.8% while prices rose by 3%. This indicates that many workers are not experiencing significant improvements in their financial security. Collectively, these economic indicators point to considerable stress within the job market.
A weak job market often encourages the Federal Reserve to lower interest rates, which typically supports the cryptocurrency market. However, the potential impact of rate cuts might not be sufficient on its own to trigger an immediate bull market. For such a rally to occur, Bitcoin needs to establish a definitive bottom.
Bitcoin Movement Looks Similar to Older Bottom Zones
Bitcoin is currently experiencing a period of deep fear, as reflected by the Fear and Greed Index, which has remained in the "Extreme Fear" zone for over five consecutive days. This prolonged period of extreme fear is unprecedented.
Extended periods of fear often precede market recoveries. Additionally, short-term traders are actively selling their holdings at a loss.
Over 60,000 BTC were transferred to exchanges in a single day, with holders selling at prices lower than their purchase cost. This type of capitulation selling is typically observed near the final stages of a market downturn.
Stablecoins are also showing signs of strength. The Stablecoin Supply Ratio RSI is currently at 26, a metric that compares the buying power of stablecoins to the overall market capitalization of Bitcoin.
A lower reading on this index suggests that a significant amount of stablecoin capital is poised on the sidelines, ready to enter the market to purchase Bitcoin.
This metric often appears near Bitcoin bottoms, indicating that fresh capital is prepared to invest in the market.
A large percentage of recent Bitcoin buyers are currently holding assets worth less than their initial investment. Approximately 95% of individuals who purchased Bitcoin in the past few months are experiencing unrealized losses. This figure is higher than what was observed during the COVID-19 pandemic and the FTX collapse.
When such a high proportion of holders are in a loss-making position, the market often undergoes a cleansing process, removing weak sellers before a new upward trend can begin.
Why These Signs Point Toward a 2026 Bull Market
When sustained high levels of fear, increased loss-selling, rising stablecoin buying power, and weakening job data occur concurrently, it often signals that the market is nearing the end of a downturn rather than the beginning of a new one.
All of these observed signals are consistent with patterns seen during previous Bitcoin market bottoms.
If Bitcoin establishes its bottom in late 2025, a significant market recovery typically commences three to six months thereafter. This projection suggests that the first quarter of 2026 could be a likely period for the next major cryptocurrency rally.
The weak jobs report may serve as an initial indicator that the central bank will need to implement interest rate reductions. The cryptocurrency market often reacts to such economic shifts with a lag, but the underlying signals are becoming apparent.
If unemployment continues to rise, the central bank may face pressure to lower interest rates, a move that has historically benefited Bitcoin. Such a policy shift could potentially act as the initial catalyst for a cryptocurrency bull market.