After a long period of ignoring macroeconomic data, cryptocurrency enthusiasts turned their attention to interest rate signals around the end of 2021. As a result, market reaction became more sensitive to economic data, including recent employment reports and Fed policy.
End of the Fed Pivot
Recent data confirms the end of the Federal Reserve’s monetary policy easing in the US. In November, speculation about a slowdown emerged, which was validated in December. However, current policy is geared towards tightening, posing challenges for cryptocurrencies despite the strengthening of Bitcoin.
Current Situation and Expectations
Recent employment data highlighted by The Kobeissi Letter has exceeded expectations by 92,000 jobs. Over the last six months, an average of 165,000 jobs have been created — the highest rate since the Fed's rate cut deferral in July 2024. Despite strong data, stock markets declined.
Cryptocurrency Market Outlook
Amid the ongoing tightening policy by the Fed, the cryptocurrency market faces challenges. Should upcoming inflation data fall short of expectations, it may trigger market volatility in 2025.
Experts believe the Fed pivot is over. 2025 is anticipated to be extremely active for financial markets. Inflation data and Fed's monetary policy will be key factors for the crypto market.
