Fed Rate Cuts Now? Bitcoin Tumbles Under $113K as ISM Services PMI Shakes Markets

Another day, another macroeconomic tremor rattling crypto. Bitcoin's brief flirtation with stability ended abruptly as the ISM Services PMI data sent it crashing back below $113,000—proof that even 'digital gold' isn't immune to old-school economic reports.

Wall Street's favorite volatility puppet show continues. Traders are now obsessing over whether the Fed will cut rates to prop up the services sector—because clearly, more cheap money fixes everything (until it doesn't).

Meanwhile, Bitcoin holders are left wondering if this is a buying opportunity or the start of another 'macro winter.' Pro tip: When traditional finance sneezes, crypto still catches the flu—just with 10x the leverage.

Compounding that sign of economic weakness was a stagflationary signal embedded in the report, the Prices Paid subindex, which shot up to a cycle high of 69.9.

"Tariffs are causing additional costs as we continue to purchase equipment and supplies ... the cost is significant enough that we are postponing other projects to accommodate these cost changes," read one comment from the report.

Neither crypto nor traditional markets took kindly to the Tuesday data, with Bitcoin (BTC) pulling back from above $114,000 to $112,800, lower by nearly 2% over the past 24 hours. The Nasdaq reversed from earlier gains to a 0.5% loss.

"The data always suffers big revisions when the economy is at an inflection point, like a recession," wrote economist Mark Zandi after the big downward jobs revisions Friday.

"The economy is on the precipice of recession," he continued. "Consumer spending has flatlined, construction and manufacturing are contracting, and employment is set to fall. With inflation on the rise, it's tough for the Fed to come to the rescue."

Longtime managers at Hoisington Investment Management, Lacy Hunt and Van Hoisington aren't so sure the Fed can wait. Calling inflation gains from tariffs temporary and a first-round effect, Hunt and Hoisington say the second, third and later round contractionary effects are of far more import.

"The Fed needs to be quickly moving to an accommodative policy," they concluded. "The Fed will be ill advised to wait ... The far more critical consideration is the coming contraction in global economic activity."