Bitcoin Retreats, Trade Gap Narrows, Jobless Claims Spike Markets on Edge

Summary:

Bitcoin slid below $90,000, U.S. jobless claims saw their sharpest rise since 2020, and the trade deficit narrowed to its lowest level in over five years, reflecting both market fragility and economic complexity....

Bitcoin Below $90K Amid AI-Induced Risk Aversion

Bitcoin fell 2.5% to $90,056.24, breaking below the psychological $90,000 mark as market sentiment soured following disappointing AI-related earnings from Oracle. Investors were rattled by signs that soaring infrastructure spending in the AI sector hasn’t yet translated into profits, dampening broader appetite for risk assets. Ether also dropped 4.3% to $3,196.62.

The pullback came despite otherwise resilient equity markets, highlighting a growing divergence between crypto and traditional risk assets. Analysts noted that crypto markets are still digesting the October 10 selloff and remain hesitant. Standard Chartered, adjusting to new macro conditions, slashed its 2025 year-end Bitcoin forecast from $200,000 to $100,000, citing a likely end to corporate treasury buying and emphasizing that future growth will now depend mainly on ETF inflows.

Economic Surprise: U.S. Trade Deficit Narrows Sharply

Contrary to expectations of a widening gap, the U.S. trade deficit shrank by 10.9% in September to $52.8 billion its smallest level since June 2020. This significant drop, well below the forecasted $63.3 billion, was driven by a 3% jump in exports (to $289.3 billion), particularly a 4.9% surge in goods exports to a record $187.6 billion. Imports rose only 0.6%.

This suggests trade may have added to Q3 GDP growth. Before the release, the Atlanta Fed projected Q3 GDP at 3.5%. The U.S. government will publish the official estimate on December 23. This narrowing comes despite trade volatility caused by President Trump’s continued protectionist policies and tariff-driven distortions.

Labor Market: Jobless Claims Surge, But Analysts Warn Not to Panic

Initial jobless claims jumped by 44,000 to 236,000 in the week ended Dec. 6 the biggest weekly increase since March 2020. However, economists caution this figure may be skewed by holiday volatility. The previous week had seen the lowest claims in three years due to Thanksgiving-related timing.

Unadjusted claims rose nearly 115,000, with increases concentrated in California, Texas, Illinois, and New York. Despite this spike, the four-week moving average a more stable indicator rose only modestly to 216,750, still within the historical norms of a stable labor market.

Some analysts, like Pantheon Macroeconomics, interpret the rise as a sign of increasing layoffs, while others, such as High Frequency Economics, see it as seasonal noise. Major employers like PepsiCo and HP have recently announced job cuts, contributing to broader concerns about labor market softening. However, Navy Federal’s chief economist advises caution: “Smoothing it out, this still looks like an economy averaging 215,000 to 220,000 new jobless claims a week. That’s not a cause for concern.”

Market Sentiment: Risk Off Prevails Despite Mixed Signals

The disconnect between crypto and equities, the labor market's erratic signals, and narrowing trade deficit data reflect a complex macroeconomic picture. While Fed Chair Jerome Powell described the labor market as “gradually cooling” and highlighted downside risks in job creation, the central bank did not revise its unemployment forecasts for 2026.

With crypto sentiment fragile, AI profits uncertain, and recession fears still lingering under the surface of stronger trade numbers, investors are navigating choppy waters heading into 2026.

Remain cautious with crypto. If Bitcoin fails to recover above $92,000 in the near term, it may test stronger support around $86,500–$87,000. On the macro side, a narrower trade deficit and resilient consumer demand may support the USD, especially if labor market fears are overblown.

Source: Reuters

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