U.S. December ADP employment data just came out, and the market was stunned. Only 41,000 new jobs added, far below the expected 47,000, which is a rare piece of underwhelming data in recent times.

This set of data clearly shows how weak the U.S. labor market is. Although there was a rebound compared to the revised negative growth in November, the key issue is: employment has declined in three out of four months. This is not just a temporary fluctuation but a genuine trend signal.

Why does the market care so much? Because employment data directly influences the Federal Reserve's policy direction. Citigroup's latest forecast suggests that by 2026, the Fed may cut interest rates by 75 to 100 basis points. If this Friday’s non-farm payrolls also continue to be weak, the probability of the Fed cutting rates by 25 basis points in January will significantly increase. Think about what this means for the crypto market—more relaxed funding conditions, abundant liquidity, which often benefits assets like Bitcoin and Ethereum.

The market reacted quickly after the data was released. The 10-year U.S. Treasury yield fell by 3 basis points, the dollar index remained flat, Bitcoin stabilized above 92,000, and Ethereum held the 3,250 support level after short-term volatility. Institutional players have already been sensing the trend; Fed doves like Mester previously hinted that rate cuts could exceed 100 basis points this year, and the weak employment data now gives further support to rate cut expectations.

But don’t get overly optimistic. The real key is the big non-farm payrolls report on Friday. If the unemployment rate doesn’t rise to the expected 4.7%, rate cut expectations might be scaled back. For crypto investors, it’s crucial to closely watch the data release window, as changes in policy expectations often bring structural trading opportunities.

What’s your take? Will such weak employment data really push the Fed to act in January? Can Bitcoin break through 95,000 riding on the rate cut wave?