A fresh wave of layoffs is sweeping across industries in 2025, signaling that the labor market may enter its most turbulent phase since the pandemic-era downturn. This adds to the list of US macroeconomic indicators with crypto implications.
Job cuts are no longer isolated to tech giants or government agencies, and the real economy is flashing red. Equity markets are also treading water, and crypto investors are clinging to rate cut hopes.
Crypto Eyes Labor Market as Layoffs Spike 80% in 2025—Is Inflation No Longer the Main Threat?
Employment and jobs data are progressively gaining influence as one of the US economic indicators with crypto implications.
The layoff wave that rattled markets in 2022–2023 is making a sharp return in 2025. Reportedly, US-based companies announced more job cuts in the first five months of 2025 than in any equivalent period over the past four years.
“Tariffs, funding cuts, consumer spending, and overall economic pessimism are putting intense pressure on companies’ workforces. Companies are spending less, slowing hiring, and sending layoff notices,” wrote Forex Analytix, citing Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas.
Data also shows deterioration in the US labor market. According to Challenger, Gray & Christmas, May 2025 job cuts are up 47% over the same month last year. Year-to-date (YTD) cuts are also up 80% over 2024.
“Cuts are spreading to other sectors than Government, for other reasons than budget cuts and Dogecoin crashes,” the outplacement firm noted.
Challenger Job Cuts January to May 2018 to 2025. Source: Challenger, Gray & Christmas
Andrew Challenger, Senior Vice President at the firm, offered a blunt assessment. He noted that Trump’s tariffs, funding cuts, consumer spending, and overall economic pessimism put intense pressure on companies’ workforces.
Thursday’s data reinforces the trend, with US initial jobless claims rising by 8,000 to 247,000 for the week ending May 31.
This means applications for US unemployment benefits unexpectedly increased last week. Meanwhile, Bloomberg noted that the US trade deficit narrowed in April by the most on record, on the largest-ever plunge in imports.
This is the highest level since early October 2024 and significantly above market expectations of 236,000. This indicates a softening labor market, with signs of weakening or slowing down, often indicating reduced economic activity or confidence.
Initial jobless claims. Source: Crypto Dives on X
At the same time, the Kobeissi Letter flagged a deeper undercurrent, noting that the 3-month moving average of job openings fell to 7.36 million in April, the lowest since 2021.
This is also below the pre-pandemic peak in Q4 2018, with the ratio of job openings to unemployed workers hitting 1.03, the second-lowest since April 2021.
“US job openings continue to trend lower…The job market is clearly weakening,” wrote The Kobeissi Letter.
However, the May jobs report showed that the US economy added 139,000 nonfarm payrolls in May, more than the 126,000 that were expected.
“The US Labour market has shrugged off the tariff uncertainty that rocked global stock and bond markets in April and May.While the Federal government has continued to shed a small number of jobs, the wider economy has more than made up the difference, with the US adding slightly more jobs than expected in May. Wage growth also came in higher than expected – suggesting the economy is in rude health,” Nicholas Hyett, Investment Manager at Wealth Club told BeInCrypto.
This outcome supports the Trump administration’s narrative that its tariff policies are designed to prioritize Americans over financial markets. However, Hyett added that from the White House’s perspective, economic strength and rising wages are double-edged swords. They reduce the likelihood of interest rate cuts by the Federal Reserve.
AI Disruption, Shrinking Demand, and VC Retreat Amplify Labor Market Stress
The causes behind this layoff wave are more structural than cyclical. According to macro commentator Zachary T. Bravo, the job loss may be AI-driven.
“We’re in the early innings now; companies aren’t calling it AI-related (that’s politically unacceptable); the point is, companies are down-sizing and some roles are now fully obsolete,” Bravo stated.
He outlined four waves of job loss: tech and government layoffs, AI-driven job loss, companies reacting to the reduced top-line crunch with further layoffs as consumption ticks down, and robot-related job loss.
Based on this, the commentator foresees the government printing money to cushion the economic impact.
“Prediction: the government will print money to pull us out. Expect public works projects, increased debt to fund them (weak dollar, expensive credit), and (silver lining) some better infrastructure,” Bravo added.
Crypto-native firms are feeling the pinch too. BeInCrypto reported the Ethereum Foundation laying off staff as part of a core team overhaul. This may imply internal cost restructuring even in mission-critical blockchain institutions.
Meanwhile, the venture capitalist (VC) arena is undergoing a shift, with portfolio manager Greg Isenberg highlighting the broader consequences.
“Layoffs come in waves, not all at once. First round in Q2 (10-15%), then again in Q4 (15-25%) as companies realize the first cut wasn’t deep enough…VCs get quieter. LPs pull back commitments when markets drop, slowing capital calls… Corporate spending gets cold/freezes,” he warned.
Isenberg pointed to “a double whammy” for consumer startups: recession-wary customers spend less, and tariffs increase the cost of goods sold. Direct-to-consumer (DTC) or e-commerce companies with thin margins are hit hardest.
“The losers… high-burn DTC brands… late-stage startups that prioritized growth over unit economics… The winners… profitable companies, solo founders with low burn, startups with pricing power, and AI companies solving genuine business problems,” Isenberg explained.
With layoffs rising, job openings shrinking, and investor risk appetite waning, the second half of 2025 may hinge on employment beyond inflation and interest rates. This narrative shift has deep implications for crypto, capital, and consumer demand.
Bitcoin (BTC) Price Performance. Source: BeInCrypto
Bitcoin was trading for $103,720 as of this writing, down by nearly 1% in the last 24 hours.
