Bitcoin Braces for Labor Market Shock as U.S. Layoffs Spike 80% in 2025

As the U.S. economy struggles with a new wave of job losses, crypto investors are increasingly shifting their focus from inflation to employment data. With layoffs up 80% year-to-date and warning signs flashing across sectors, the labor market is emerging as a critical macroeconomic factor for Bitcoin’s next big move.

Layoffs Surge Across the Board

According to data from Challenger, Gray & Christmas, U.S. companies announced more job cuts in the first five months of 2025 than in any equivalent period since 2020. May alone saw a 47% year-over-year increase in layoffs, reflecting a broader slowdown beyond tech and government jobs.

Initial jobless claims also rose unexpectedly, climbing to 247,000 in the last week of May—well above market forecasts. Meanwhile, job openings fell to 7.36 million in April, the lowest since 2021, according to The Kobeissi Letter. The job-to-worker ratio dropped to 1.03, highlighting an increasingly fragile labor market.

“This isn’t just cyclical,” said Andrew Challenger, SVP at Challenger, Gray & Christmas. “It’s structural—tariffs, declining consumer spending, and AI-driven automation are putting widespread pressure on hiring.”

Bitcoin and Crypto: Watching More Than Inflation

While Bitcoin has long been seen as a hedge against inflation, the new macro concern is employment. A weakening labor market could force policymakers to revisit rate cut strategies and fiscal stimulus—two dynamics that historically benefit crypto markets.

Crypto analyst Nic Puckrin of Coin Bureau noted that Bitcoin’s store-of-value appeal remains strong in uncertain times.

“Even in a stagflation scenario, Bitcoin remains an increasingly attractive option for investors fleeing U.S. assets or losing faith in the dollar. It was built for moments like this,” Puckrin explained.

Despite recent fears, May’s non-farm payroll report showed an unexpected 139,000 job gain, slightly beating forecasts. But market watchers remain cautious, noting the fragile balance between strong wage growth and declining job creation.

Wealth Club’s Nicholas Hyett emphasized that while the labor data looks resilient on the surface, persistent strength could actually reduce the chances of Federal Reserve rate cuts—adding further strain to risk assets.

AI, Tariffs, and VC Pullback Add to Pressure

Several compounding factors are deepening the labor market’s pain. AI is beginning to displace roles, even if companies aren’t openly attributing layoffs to automation.

“We’re still in the early innings, but some job functions are already obsolete,” warned macro analyst Zachary T. Bravo. He predicted the government will eventually print money to fund public works and cushion economic stress—a move that could trigger renewed crypto inflows.

The startup world is also tightening its belt. Venture capital firms are scaling back, and companies across stages are preparing for a leaner environment.

“Layoffs happen in waves,” said portfolio manager Greg Isenberg. “First in Q2, again in Q4. Capital slows, consumer spending weakens, and only lean, profitable ventures will weather the storm.”

Crypto-native firms aren’t immune. Even the Ethereum Foundation has begun trimming staff amid internal restructuring.

Bitcoin Price Holds Steady—But for How Long?

With employment data now influencing the Federal Reserve’s next moves, investors are eyeing Bitcoin’s response closely. At the time of writing, BTC was trading around $103,720, down 1% in the past 24 hours.

If job market weakness intensifies, it could accelerate calls for fiscal stimulus or rate cuts—potentially setting up favorable conditions for crypto. But if policymakers hesitate or if consumer demand collapses further, even Bitcoin’s resilience may be tested.