Bitfinex: Interest rate cuts may support asset prices, but weak employment and high debt could exacerbate market volatility

Bitfinex has released a latest report stating that following the recent weak performance of U.S. labor data, the market expects the Federal Reserve to announce an interest rate cut today (December 10).

The current voluntary resignation rate has dropped to about 1.8%, the lowest level since 2020, while the layoff rate is nearing a three-year high. This indicates that wage pressure is easing, providing a basis for interest rate cuts, which is a key driver for Bitcoin ($BTC) and other risk assets. Consumers are increasingly relying on credit.

Currently, the year-on-year increase in the Consumer Price Index (CPI) hovers between 2.5% and 2.7%, still above the 2% policy target. Meanwhile, U.S. credit card debt has surpassed $1.2 trillion, with an average interest rate exceeding 20%. The tightening of household finances makes the macro environment for risk assets more fragile.

For traders, the coexistence of weak labor data and rising credit usage means that a cautious strategy should be adopted. While interest rate cuts may support asset prices, the sluggish growth and consumers' financial strain could still amplify the intensity of market shocks.