Crypto Markets Stumble as PPI Shockwave Hits—Here’s What Comes Next
Crypto just got sucker-punched by macro.
Unexpected PPI Data Rocks Markets
August’s Producer Price Index drop caught traders off-guard—triggering a cascade of liquidations across BTC, ETH, and altcoins. The ‘inflation cooling’ narrative? Suddenly in question.
DeFi’s Pain, TradFi’s Gain
While decentralized protocols bled, Wall Street’s algos feasted on volatility. Classic case of ‘risk-off’ meets ‘same old Wall Street casino.’
The Silver Lining Playbook
History shows crypto bounces harder after macro shocks. This ain’t 2022—institutional buffers and ETF flows could turn this dip into a discount.
Remember: The market takes the stairs up and the elevator down. Buckle up.
$118,720 was still trading above $120,000. Now, Bitcoin is at $118,000. But what is driving this decline? Why are cryptocurrencies falling?
ContentsReasons Behind the Cryptocurrency DipThe Impact of PPI on Interest Rates
Reasons Behind the Cryptocurrency Dip
The PPI data exceeded expectations significantly, with a monthly increase of 0.9%. If even half of this increase reflects in the Consumer Price Index (CPI), it could lead to serious issues. Additionally, the PPI is crucial for the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index. This gives Fed Chair Jerome Powell the grounds to justify avoiding interest rate cuts, citing the effects of tariffs.
Cryptocurrencies still have many reasons for an upward trend, yet the latest developments provide reasons for cleaning out excessive long positions, possibly testing levels around $116,000. The more critical issue could be Ethereum
$4,563 losing its $4,100 price support, indicating a failed resistance test.
Though ethereum prices have retraced to $4,500, they currently hold that level. For traders seeking short opportunities in rapidly rising altcoins, sudden price surges remain surprising. In just the past hour, positions worth $564 million were liquidated, with $537 million being long positions.
The Impact of PPI on Interest Rates
Bessent discussed the possibility of a 50 basis point rate cut just before the PPI data came in well above expectations, leading to a downgrade in September rate cut expectations. On the previous day, Fed’s Goolsbee expressed concerns over tariff impacts on inflation while maintaining confidence in a strong labor market.
The PPI report noted the largest increase in a 12-month period since February 2025, with significant hikes in food, energy, and trade services. Excluding these areas, the final demand index ROSE 0.6% in July, marking the largest increase since March 2022’s 0.9% spike. Over a 12-month span ending in July, final demand prices excluding food, energy, and trade services rose by 2.8%.
The processed goods index saw its first notable increase since January’s heightened tariff concerns, with processed energy products up by 2.2%. The rise was largely driven by an 11.8% increase in diesel fuel, emphasizing deeper tariff impacts in the data.
Overall, more than three-quarters of July’s broad-based rise stemmed from a 1.1% increase in final demand services. Final demand goods prices rose by 0.7%, fueled by a 3.8% increase in machinery and equipment wholesale margins. This data reveals clearer evidence of tariffs’ impacts.
As all countries implemented tariffs in August, the effects on PPI data will become even more apparent. The Federal Reserve will take these factors into account before making decisions in the September meeting. Continued increases could deter interest rate cuts, and maintaining rates might become a dovish stance, which could negatively affect risk markets.
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