Option 1: Skill up. This implies that you want to make yourself appealing for jobs you believe are better for you, and/or you don't believe there are many jobs that would hire you as-is.
Option 2: Lower standards. It implies that there are still plenty of jobs that would hire you with your background as-is, but you're not properly targeting them.
Are there good reasons to just skip the skill building for the time being, and lower your expectations greatly for a future job if your goal is to get a job as soon as possible?
So you take what you can find for a job.
For some reason, getting a job from unemployment is often very difficult, while it is much easier to find a new position when you already employed.
You are more confident then, have a better stance in negotiation, etc.
If you have enough resources and assets to burn through, while skilling up without pay, you are quite lucky.
You can always skill up: bad job or good job, its never a bad idea to keep up with the progress in your field and try new ways to apply it to your current job.
Option 1 is something you might want to do continuously. If you assume that you'll eventually be laid off (market cycle), at least you didn't wait until the last minute to have picked up a few new skills.