The crypto market has experienced a sharp downturn in recent days, as stronger-than-expected economic data sent interest rates climbing and raised concerns about the Federal Reserve’s willingness to continue cutting rates.

In December, the U.S. labor market showed impressive growth, with job creation far surpassing economists’ forecasts and the unemployment rate unexpectedly dropping. According to the Bureau of Labor Statistics, 256,000 jobs were added last month, exceeding the predicted 160,000 and up from a revised 212,000 in November (originally reported as 227,000).

The unemployment rate also fell to 4.1% in December, beating expectations of 4.2% and improving from 4.2% in November.

Despite a brief attempt to rebound, Bitcoin (BTC) saw a decline of more than 2% in the immediate aftermath of the jobs report, dropping to $92,800.

The jobs data came on the heels of several other economic reports that triggered a selloff across various asset classes. As a result, market participants are scaling back their expectations for continued Federal Reserve rate cuts in 2025. The crypto market, which had previously been performing well, bore the brunt of this shift, with Bitcoin falling from nearly $103,000 on Monday to below $92,000 by Thursday. Major altcoins also suffered significant losses on a percentage basis.

In traditional markets, U.S. stock index futures dropped by around 1% after the jobs data. The bond market saw the most pronounced reaction, with the 10-year Treasury yield climbing by nine basis points to 4.78%. The dollar index surged by 0.6%, while gold prices fell slightly to just below $2,700 per ounce.

Traders are quickly reassessing their expectations for rate cuts in 2025. The likelihood of a rate cut in March has fallen to 28%, down from 41% just before the jobs report, and the odds of a May rate cut have dropped to 34%, from 44% previously, according to CME FedWatch.

The report also showed that average hourly earnings rose by 0.3% in December, in line with forecasts but lower than the 0.4% increase in November. On a year-over-year basis, average hourly earnings grew by 3.9%, slightly below the anticipated 4% and lower than November’s 4% increase.