U.S. Jobless Claims Beat Forecasts as January Fed Rate Cut Odds Slide, Impacting Bitcoin Outlook

U.S. initial jobless claims have once again come in below market expectations, signaling resilience in the labor market and reducing the likelihood of an imminent Federal Reserve rate cut. This macroeconomic development is drawing attention across financial markets, particularly crypto, where expectations of monetary easing have historically fueled Bitcoin rallies.

According to the latest data from the U.S. Department of Labor, initial jobless claims for the week ending December 27 fell to 199,000, a decline of 16,000 from the prior week’s revised figure. Economists had forecast claims to rise to around 219,000, making the actual number a notable downside surprise. Continuing jobless claims also declined to 1.866 million, compared to expectations of 1.902 million, further underscoring labor market stability.

The previous week’s initial claims were revised upward by 1,000 to 215,000, but the latest drop suggests layoffs remain limited despite broader economic uncertainty. Earlier in the year, signs of labor market weakness contributed to multiple Federal Reserve rate cuts, as policymakers aimed to support economic growth. However, the latest data strengthens the case for the Fed to pause further easing, a stance echoed by several officials in recent FOMC meeting minutes.

That said, some analysts caution that the decline in jobless claims could be influenced by seasonal factors related to the holidays. Fed Governor Christopher Waller has also noted that current labor market conditions may still justify additional rate cuts if inflation continues to cool. Notably, November jobs data showed the U.S. unemployment rate rising to 4.6%, slightly above expectations.

Bitcoin price action has remained relatively stable following the data release. BTC is trading near $88,800, rebounding from an intraday low around $87,700, according to TradingView. Despite the short-term resilience, Bitcoin is still down nearly 6% year-to-date, reflecting broader macro headwinds.

Market-based indicators show declining expectations for near-term monetary easing. Polymarket data now assigns just a 13% probability to a 25-basis-point Fed rate cut at the January FOMC meeting, while CME FedWatch shows similar odds, with the majority of traders expecting rates to remain unchanged. While future cuts remain possible later in the year, reduced January rate cut odds are viewed as a near-term negative for the crypto market.