Crypto Markets Tumble as US PPI Report Sparks Sell-Off – Bulls Beware

Crypto's fragile rally just got kneecapped by cold, hard macro data.

The Producer Price Index (PPI) – that sneaky inflation metric Wall Street loves to ignore until it bites – just triggered a cascade of liquidations. Bitcoin, Ethereum, and altcoins all flushed faster than a leveraged trader after a 10% dip.

Why Traders Are Sweating

PPI isn't consumer inflation (that's CPI's job), but it's the canary in the coal mine. When producers pay more, Main Street eventually does too. The Fed's printers might stay idle longer – and crypto hates high rates almost as much as VC founders hate bear markets.

Silver Linings Playbook?

Dips like this separate diamond hands from paper hands. Remember: every institutional 'risk-off' move creates bargains for those who actually believe in blockchain's fundamentals. Or at least that's what bagholders tell themselves.

One cynical take? Traditional finance still controls the leash – and they'll yank it whenever their spreadsheet jockeys get spooked. Crypto's 'decoupling' narrative? Still MIA.

What to know

• July PPI surged 0.9% month-over-month and 3.3% year-over-year, both well above forecasts, reducing expectations for near-term Fed rate cuts.

• Bitcoin and ether quickly tumbled, leading crypto markets sharply lower in wake of the data.

Inflation concerns were re-ignited during U.S. morning hours Thursday, sending risk assets — crypto among them — sharply lower.

The July Producer Price Index (PPI) ROSE 0.9%, blowing past estimates for 0.2% and 0.0% in June. On a year-over-year basis, PPI was higher by 3.3% versus forecasts for 2.5% and June's 2.4%.

Core PPI, which excludes food and energy, also surged 0.9% in July, far exceeding the 0.2% expected and 0.0% in June. Core CPI year-over-year rose 3.7% against 2.9% expected and 2.6% in June.

Already well off a record high hit overnight above $124,000, bitcoin tumbled below $119,000 on the news. Ether (ETH) plunged nearly 4% to $4,550. Other recently red-hot altcoins like solana were similarly struck.

Fresh labor market data provided no relief, with initial jobless claims for the week ending August 9 at 224,000, slightly below the 228,000 expected, and continuing claims holding at 1.95 million. The still-tight labor market, combined with the strong PPI readings, reinforced the view that the Fed may keep interest rates elevated for longer to tame inflation.

According to CME FedWatch, the previous 100% chance for a September rate cut slipped to 96% in wake of the fresh data.

In traditional markets, U.S. stock index futures have slipped 0.5%, the dollar is gaining ground and the 10-year U.S. Treasury yield moved higher by five basis points to 4.25%.