Key Takeaways:

• The U.S. jobless claims were reported lower than expected.
• Other economic data, including U.S. GDP growth and PCE inflation, came in hotter than expected.
• These macroeconomic factors could weigh on the already fragile crypto market.

The crypto market suffered another volatile day on Thursday, whereby traders absorbed robust-than-anticipated U.S. jobless claims data, GDP growth, PCE inflation, and comments by Fed Chairman Jerome Powell. Meanwhile, CoinGlass data demonstrated that over $542 million leveraged positions were realized in 24 hours, with Ethereum, Bitcoin, and Solana topping the list of losers.

U.S. Economic Data and Its Impact on the Crypto Market

The U.S. released fresh economic data for the week ending September 20, and the numbers had a direct effect on the crypto market. Initial jobless claims dropped to 218,000, compared to the forecast of 235,000. This decline showed that the labor market is still strong. Investors now believe the U.S. economy is not slowing down as much as many expected.

For the crypto world, this update is important. Fewer jobless claims mean the Federal Reserve is less likely to cut rates aggressively. Rate cuts usually give a boost to speculative assets like Bitcoin and Ethereum. Without that push, inflows into crypto may stay restricted.

The Bureau of Economic Analysis also confirmed that U.S. real GDP grew by 3.8% in the second quarter. This was higher than the expected 3.3% growth. The stronger economic growth makes it harder to argue for looser financial conditions. A strong dollar and higher growth expectations usually create more pressure on digital assets.

Inflation Concerns and Fed Policy

The Fed’s preferred measure of inflation, the core Personal Consumption Expenditures (PCE) index, rose to 2.6%. This was slightly above the expected 2.5%. Even a small upward surprise tells markets that inflation is cooling more slowly than they had priced in. This feeds the “higher for longer” narrative, where interest rates remain elevated for an extended period.

For crypto investors, this is bad news. High interest rates reduce risk appetite, which limits money flowing into assets like Bitcoin and altcoins. Traders who had expected relief from tighter financial conditions were caught off guard. The result was a wave of liquidations in the derivatives market.

Powell’s Warning and Market Reaction

At an economic forum, Federal Reserve Chair Jerome Powell added more caution to the mix. He highlighted two risks—higher inflation and a slowdown in the labor market. He also noted that tariffs would cause a one-time increase in consumer prices. Powell admitted there is still a lot of uncertainty around the future path of inflation.

His comments, combined with the strong economic data, triggered panic in crypto markets. According to CoinGlass, 163,045 traders were liquidated in just one day. Long positions took the hardest hit.

Ethereum saw the largest liquidation volume, with $215.1 million wiped out. Solana followed with $46.39 million, while smaller tokens under the “Other” category lost $56.59 million. Dogecoin and Aster each saw over $12 million in losses. In total, $542.18 million in crypto positions were liquidated. Of this, $475.23 million came from long liquidations, while only $66.95 million came from shorts. The largest single liquidation was an ETH-USD order worth $29.12 million on Hyperliquid.

ETF Flows: A Mixed Signal

ETF flows painted a divided picture between Bitcoin and Ethereum. On September 24, spot Bitcoin ETFs recorded strong inflows of $241 million. The iShares Bitcoin Trust by BlackRock led the way with $129 million in inflows.

In contrast, spot Ethereum ETFs saw outflows of $79.36 million. This marked the third day in a row of redemptions. The difference in ETF flows showed that investors are currently more confident in Bitcoin compared to Ethereum.

Final Takeaway

The crypto market is under pressure due to the latest U.S. economic data and Powell’s cautious tone. Strong jobless claim numbers and better-than-expected GDP growth reinforced the idea of a strong U.S. economy. At the same time, higher inflation readings mean interest rates are likely to stay elevated.

For Bitcoin, Ethereum, and altcoins, this mix creates headwinds. Liquidity is tighter, the dollar is stronger, and investors have less appetite for risk. ETF flows suggest Bitcoin is still attracting interest, but Ethereum is struggling with consistent outflows.

At the time of writing, Bitcoin is trading under $112,000, while Ethereum remains below $4,000. The road ahead looks challenging for crypto investors as the U.S. economy continues to show strength while inflation lingers.