How Strong Economic Data Shook Crypto Markets Near Crisis, But 2026 Shows Market Resilience

In early 2025, crypto markets faced an unexpected jolt when U.S. economic data arrived hotter than anticipated, sending Bitcoin and major altcoins into sharp retreat. The incident revealed how near crypto is to the broader macroeconomic forces—a lesson that becomes even clearer as we look back from 2026.

The trigger came from two economic reports released simultaneously in early January 2025. The Bureau of Labor Statistics reported that job openings unexpectedly rose to 8.1 million in November, defying analyst expectations for a decline to 7.7 million. Simultaneously, the ISM Services Purchasing Managers Index came in at 54.1 for December, beating expectations of 53.3. More pressingly, the Prices Paid subindex posted a red-hot 64.4 reading, far exceeding the anticipated 57.5 and prior month’s 58.2—clear signals that inflation concerns were far from resolved.

Economic Headwinds Derail Crypto Momentum

Though these reports rarely move markets on their own, their combined effect proved destabilizing. Bond markets reacted swiftly, with the 10-year U.S. Treasury yield climbing another five basis points to 4.68%, approaching multi-year highs. This repricing of economic expectations sent equities lower, with the Nasdaq retreating over 1% and the S&P 500 sliding 0.4%.

Bitcoin, which had been trading near $101,000 through European afternoon trading, stumbled to $97,800—a 4% decline that wiped out previous session gains. The shock rippled through altcoin markets with particular force. Ethereum’s ether slid 6%-7%, Solana’s SOL retreated by similar magnitude, while Avalanche’s AVAX and Chainlink’s LINK tumbled 8%-9%, underscoring how near crypto’s entire ecosystem sat to the financial margins.

The Liquidation Wave and Derivative Destruction

The swift price correction triggered a cascade of forced exits across crypto derivatives markets. According to CoinGlass data, nearly $300 million in long positions were liquidated as leveraged traders absorbed heavy losses—marking the first major liquidity flush of 2025. This concentrated pain illustrated a critical vulnerability: how quickly excessive leverage in crypto can amplify market stress.

The broader implication showed how near crypto markets were to the edge, where macro shocks translate directly into capital destruction. Investors had underestimated the connection between Federal Reserve policy expectations and digital asset valuations.

Rate Cut Expectations Collapse

The economic data forced a dramatic reassessment of monetary policy expectations. While traders had already abandoned hopes for a January Fed rate cut, the twin reports pushed March rate-cut odds down to just 37%—a collapse from nearly 50% just one week prior, according to CME FedWatch data. May rate-cut probabilities also fell well below 50%.

Perhaps most strikingly, market participants recalibrated their full-year outlook. According to analysis from Ballinger Group’s Kyle Chapman, investors began pricing in only a single 25 basis-point rate cut for all of 2025—a dramatic shift from the multi-cut expectations that had dominated late 2024.

Technical Reversal and Market Resilience

Following this volatility shock, Bitcoin staged a sharp short-squeeze rally that jolted altcoins including ETH, SOL, DOGE, and ADA, alongside crypto-related equities like Circle and Coinbase. LMAX Group’s Joel Kruger cautioned that this rebound appeared primarily technical in nature—a mechanical bounce driven by bearish positioning and thin liquidity rather than fundamental improvement.

Yet the rebound carried significance. It demonstrated market resilience and the limits to downward momentum. FalconX’s Joshua Lim noted that some funds seized the opportunity to rotate into volatile altcoins and derivatives positions, suggesting that despite the shock, conviction-based capital remained active.

2026 Recovery and Market Lessons

Fast-forward to February 2026, and the market’s recovery capacity becomes evident. Bitcoin has rebounded to $68.23K (up 3.44% over 24 hours), while the altcoins that tumbled hardest show impressive rebounds: ETH up 6.84%, SOL up 6.87%, AVAX up 10.00%, and LINK up 7.61%. This recovery pattern demonstrates that while crypto remains near traditional macroeconomic forces, it also possesses self-healing mechanisms.

The 2025 episode offers critical lessons about how near crypto sits to broader policy cycles. Traders learned that jobless claims data, service sector activity, and inflation signals flow directly into digital asset pricing. The episode validated what many had known conceptually but not fully internalized: crypto markets don’t operate in isolation. Economic shocks transmit through bond yields, equity corrections, and ultimately into liquidation cascades.

Key resistance levels that emerged from that period—around $72,000 and $78,000—became benchmarks for assessing whether moves represent genuine structural strength or mere technical bounces. The continuing dance between these levels and current pricing suggests markets are still calibrating to the policy environment.