The US Producer Price Index (PPI) data, which dominated global markets, was released, and the figures significantly exceeded market expectations. This indicator, closely monitored by the Federal Reserve (FED) in its fight against inflation, also resonated in the cryptocurrency markets; the leading cryptocurrency, Bitcoin, faced very slight selling pressure after the data release.
What do the PPI data say?
The PPI report released by the US Bureau of Statistics (BLS) on Friday revealed that producer inflation was stronger than expected. The data released are as follows:
Producer Price Index (Monthly): Announced 0.5% – Expectation 0.3% – Previous 0.4%
Producer Price Index (Annual): Announced 2.9% – Expectation 2.6% – Previous 3.0%
Core PPI (Monthly): Announced 0.8% – Expectation 0.3% – Previous 0.7%
Core PPI (Annual): Announced 3.6% – Expectation 3.0% – Previous 3.3%
The 0.5% monthly increase in PPI was almost double the 0.3% figure predicted by analysts. On an annual basis, although inflation decreased from 3.0% to 2.9% compared to the previous month, it remained significantly above the market expectation of 2.6%. In particular, the core PPI, which excludes food and energy prices, exceeding expectations by 3.6% annually, reignited inflation concerns.
A picture that makes things difficult for the Fed
These data came in an environment where investors expect two interest rate cuts from the Fed this year. However, producer inflation, which is higher than expected, strengthens the possibility that the central bank may postpone interest rate cuts or proceed with a more cautious approach. As is known, the increase in producer prices can eventually be reflected in consumer prices, creating upward pressure on the CPI; this could pave the way for the Fed to continue its monetary tightening policy for a longer period.
Indeed, after the data, the US Dollar Index (DXY) started the day with a flat trend, but continued to hold in the slightly positive region at the 97.82 level.
What is the situation with the Bitcoin price?
The picture reflected in the market data was clearly felt in the Bitcoin camp as well. When the visual is examined, it is noteworthy that the BTC/USDT pair tried to hold around $68,500 in the first hours of the day, but later experienced a sharp downward movement to the $65,500-$65,750 range. As of 16:50 Turkish time, Bitcoin is trading at $66,198.28, with a 24-hour change of -1.92%.
The daily trading range is between $66,642 and $68,617, and the fact that the price is currently close to the lower end of this range indicates that selling pressure, albeit slight, remains. The limited 1-hour change of -0.01% suggests that a strong recovery signal has not yet been generated in the short term. In other words, the higher-than-expected PPI data has pushed expectations of a Fed interest rate cut into the background, weakening risk appetite. Bitcoin's sharp loss once again highlights investors' tendency to avoid risky assets in this environment. Markets will continue to closely monitor statements from Fed officials and upcoming inflation data.
