Crypto bounces but weak US macro data, AI uncertainty threaten the recovery

Cryptocurrencies show strength despite investors concerns about the AI industry and weak US labor and consumer data. Would an acceleration of money printing boost Bitcoin？

Key takeaways:

• Low BTC and ETH leverage appetite contrasts with strong stock markets, highlighting fragile sentiment despite improving liquidity expectations.
• While economic uncertainty persists, anticipated monetary easing reduces downside risk for cryptocurrencies, favoring a potential bullish momentum.

Bitcoin (BTC) and Ether (ETH) gained momentum on Wednesday, rising to their highest levels in two weeks as investors await a more expansionist monetary policy. Weak economic indicators boosted expectations of fresh stimulus measures, increasing demand for scarce assets.

The S&P 500 index and gold also reacted positively as investors anticipated higher liquidity entering the markets. Still, with the cryptocurrency market capitalization sitting 29% below its all-time high of $4 trillion, Bitcoin and Ether traders remain alert to the possibility of a correction driven by broader economic uncertainty.

US 5-year Treasury bond vs. Total crypto cap, USD. Source: TradingView

Demand for scarce assets strengthened on Wednesday, shown by the jump in US 5-year Treasurys prices and gold approaching $4,240, up 3% in two weeks. Bitcoin held near $93,000, unchanged from two weeks earlier. Ether, however, remains 37% below its all-time high of $4,956, prompting traders to reassess the outlook for the altcoin market.

Change in US non-farm payrolls. Source: Bloomberg ADP Research

The US labor market showed signs of slowing in November as private companies cut 32,000 jobs, with small businesses facing the toughest conditions. The ADP payroll report noted that workers saw a 0.1% pay decline from October, which reduced inflation concerns. Traders now await the Feds interest rate decision on Dec. 10, expecting clearer guidance on policy direction.

Crypto should benefit from the additional incoming liquidity

Fed policymakers have signaled diverging views, partly due to the lack of official US government data during the government funding shutdown that ended on Nov. 12. Some argue rate cuts are needed to prevent deeper labor market weakness, while others warn additional reductions could aggravate inflation, which remains well above the Feds 2% target.

Growing dependence on artificial intelligence investments by some of the worlds largest companies adds another layer of uncertainty. Jean Boivin, head of the BlackRock Investment Institute, reportedly said: “There is so much talk about the potential of the bubble… people are conscious of the risk.” According to Yahoo Finance, BlackRock also highlighted the physical limitations of large-scale AI data center expansion.

The US department store operator Macy‘s said Wednesday that its outlook reflects ongoing pressure from cautious consumer spending and higher tariffs, which are expected to weigh on results in the final months of 2025. In an interview with CNBC, CEO Tony Spring said Macy’s has been forced to make “selective” price increases across most categories.

Annualized perpetual futures funding rate. Source: CoinGlass

Demand for bullish leverage positions on Bitcoin and Ether remains unusually low. Under neutral conditions, the annualized funding rate on perpetual contracts should fall between 6% and 12% to cover the cost of capital. This lack of conviction is notable given that the US Russell 2000 Small Cap Index sits just 2.3% below its all-time high.

Related: Ethereum treasury trade unwinds 80% as handful of whales dominate buys

The stock market is expected to benefit directly from expansionist monetary policies through lower capital costs and government incentives tied to AI and nuclear energy infrastructure. Without a shift in sentiment, cryptocurrencies may continue to lag as job market conditions weaken and uncertainty builds.

Despite the soft labor and consumer data, cryptocurrencies are not at imminent risk of collapse. The expected liquidity boost should help ease economic pressure and sustain appetite for scarce assets. As long as monetary conditions continue to loosen, Bitcoin and Ether are more likely to recover modest ground than face a sharp reversal.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.