Bitcoin ticked higher after the U.S. Bureau of Labor Statistics reported a 0.1% decline in the producer price index (PPI) for August, a signal that upstream inflationary pressures may be easing. That print, which fell short of consensus forecasts, led market participants to ramp up expectations for a 25-basis-point rate cut at the Federal Open Markets Committee meeting scheduled for next week. Crypto markets, which often mirror traditional risk-on/off dynamics, responded swiftly as bitcoin’s 24-hour gain approached 0.5%, lifting the price above $114,000 on major exchanges.
Analysts noted that the recent PPI reading aligns with a broader narrative of moderating goods inflation, even as “core” PPI, which excludes volatile food and energy components, rose 0.3% — its fastest pace since March. That dichotomy has created a nuanced market backdrop in which traders are parsing every nuance of incoming data to gauge the Fed’s policy trajectory. Spot bitcoin exchange-traded funds (ETFs) and other institutional vehicles saw incremental inflows after the PPI release, reflecting a view that lower borrowing costs could be bullish for digital assets.
Ethereum also benefitted from the data, with ether trading up 0.2% in the hour after the announcement. Market depth for ether futures contracts increased on derivatives platforms, suggesting heightened engagement from leveraged participants seeking directional exposure ahead of next week’s consumer price index (CPI) report. A cooler than expected CPI print could further embolden risk appetite, while hotter data would likely trigger a rapid unwind of long positions across both spot and derivatives markets.
“Lower-than-expected inflation readings tend to fuel optimism for easing U.S. monetary policy, and crypto often reflects those traditional risk-on/off shifts,” said James Toledano, chief operating officer at Unity Wallet. “We’re watching the Crypto Fear & Greed Index closely — a dip into ‘fear’ territory could offer a contrarian buying opportunity.” As of early trading, that gauge sat near 49, signaling a neutral market mood after climbing to 70 last month.
Looking forward, participants will focus on the CPI report due for release tomorrow. A miss on the headline or core readings could prompt a knee-jerk sell-off in volatile assets, including cryptocurrencies. Market models price in roughly an 80% chance of a 25-basis-point Fed cut, up from 65% immediately before the PPI print. With bitcoin already up more than 2% over the past week but still about 6% below its 30-day high, traders face the prospect of a decisive breakout or reversal as key macro data converges.
Comments (0)