Swyftx Squawk 🦜 More De-risking Ahead?

Another week closer to the end of 2025, another week of selling across crypto markets. At the time of writing Bitcoin has tumbled -4% in the last seven days, and Ethereum -11%.  

The market conditions have led to stablecoin dominance rising, with Tether now occupying third position when ranking by market cap. More on that later. 

Cracks in the labour market?

The latest US unemployment rate print came in 0.1% higher than expected this week, with a figure of 4.6% settling above the forecasted 4.5%.  

On the surface, this shift from expectations could be just a simple misreading of previous data – but let’s not forget the context here. In last week’s Squawk we highlighted how US policymakers are materially more concerned about risks to the labour market, than they are inflation. Here is the quote again from Fed Chair Jerome Powell:  

“With downside risks to employment having risen in recent months, the balance of risks has shifted.”  

So, is this a case of bad news is good news? There is logic that if we start to see a softer jobs market, it could strengthen the case for rate cuts, and who knows what other intervention. If labour conditions continue to weaken, restrictive monetary policy becomes harder to justify.  

But it’s important to note that rising unemployment isn’t bullish by default. If job losses accelerate, it raises questions about growth, earnings and risk appetite more broadly. Liquidity may improve, but sentiment can still wobble in the short term. Current GDP forecasts are sitting at 3.5% for the quarter, so growth moving forward could encounter more headwinds if this scenario plays out.  

For crypto, it may be worth acknowledging a shift is brewing.  But could we continue to see weakness in the market as the economic shift plays out? Or will the market start to price in the impending policy shifts that may result in quantitative easing to support growth? 

Time will tell, but there are some interesting trends when we look at how the market is moving right now.  

Let's take a look at stablecoin dominance in the market for example.  

Chart of the week: Stablecoin dominance is trending higher

This chart tells a quiet but important story about how the market is approaching risk. 

Stablecoin dominance measures how much capital in crypto is sitting on the sidelines, parked in USDT and USDC rather than deployed into Bitcoin, Ethereum, or altcoins. When it rises, it can mean that investors are stepping back, waiting and preserving capital. 

That’s exactly what we’ve been seeing these last few weeks. Stablecoin dominance has been grinding higher.   

If we zoom out, the comparison to prior cycles is telling. During major stress points in 2022 and again in parts of 2023, stablecoin dominance saw its relative highs in dominance.  

In relative terms, we’ve already de-risked a meaningful portion of the current –  cycle but not to extremes. So, for some, there might be alarm bells rsinging: What if there is still more selling to come?  

But it’s important to remember stablecoin dominance rising isn’t bullish or bearish on its own. It’s a reflection of behaviour. 

Right now, behaviour says investors are waiting and watching, as capital accumulates on the sidelines. 

So, the weeks ahead will be interesting to watch unfold. I’m sure many of us will be going offline to spend some much-needed time with family and friends. There will be much to analyse and talk about next year. I’ll be here keeping an eye on things and breaking it all down.  

See you all again next time.  

Flows