The U.S. PPI data have come in way above expectations, rising to as high as 3.3% year-on-year (YoY). This has sparked a bearish sentiment among investors, with the BTC price sharply dropping below $120,000 following the report’s release.
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U.S. Bureau of Labor Statistics data shows that the PPI rose to 3.3% in July, YoY, which was way higher than expectations of 2.5%. Meanwhile, the monthly data came in at 0.9%, which is the largest increase since June 2022.
Meanwhile, Core PPI also came in at 0.9% month-on-month (MoM) and 3.7% YoY, which were both higher than expectations of 0.2% and 2.9%, respectively. This has led to a massive crash in the BTC price, which has sharply dropped from the $120,000 psychological level.
Source: TradingView; BTC Price Daily ChartTradingView data shows that the flagship crypto had been trading at around this $120,000 level in anticipation of the PPI data, which many traders expected to show that inflation was steady, just like the CPI data. However, that is not the case, as the U.S. economy now looks to be facing rising inflation.
As CoinGape reported, the CPI data had come in at 2.7%, which indicated that inflation was steady, leading to increased optimism about a September Fed rate cut. The chances of a 25 basis points (bps) had risen to as high 99%.
However, with this latest data, the Fed may reconsider whether cutting rates might be the right move, seeing as inflation is on the rise. Keeping rates is bearish for the BTC price and broader crypto market since it would lower risk-on sentiment, with investors preferring safer assets.
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