Bitcoin's Rally Reveals a New Macro-Driven Market Script

Bitcoin surged past $113,000 in early trading on September 10, driven by unexpectedly weak U.S. producer price data that signaled a further cooling in inflationary pressures. The U.S. Bureau of Labor Statistics reported that the Producer Price Index (PPI) fell 0.1% in August, well below the forecast of a 0.4% increase. This marked the first monthly decline in the PPI since early 2023 and brought the annual PPI reading down to 2.8%, from 3.4% in July. Core PPI, which excludes volatile food and energy components, also declined by 0.1% for the same period.

The data reinforced expectations of a more dovish Federal Reserve, with analysts and market participants now pricing in a 0.25% rate cut at the upcoming September meeting, with some suggesting the possibility of a 0.50% reduction. The decline in PPI came after recent downward revisions to employment data, which showed total job growth had been overstated by 911,000 over the past year, reducing overall economic growth expectations. The soft inflation data coincided with a broader market rally, with equities such as the S&P 500 rising and Bitcoin gaining 1.1% to $113,449.

Ethereum also benefited from the improved macroeconomic environment, rising 1.2% to $4,372, while altcoins saw a notable influx of capital. APT, Solana (SOL), and Worldcoin (WLD) each climbed more than 15% within 24 hours. The broader crypto market displayed early signs of capital rotation into altcoins, as Bitcoin's market dominance fell to 57.3%, while the CMC Altcoin Season Index climbed to 62 out of 100. MYX Finance (MYX) was among the top performers, rising nearly 40%, while Story (IP), Pyth Network (PYTH), and Mantle (MNT) all gained more than 20%.

The upward momentum in cryptocurrencies coincided with strong earnings reports from major tech and semiconductor firms, including Oracle and TSMC, which further buoyed risk-on sentiment. Oracle reported a 350% increase in backlog to over $455 billion, while TSMC saw August sales rise 34%, exceeding expectations. These developments, combined with the PPI data, contributed to a rise in futures open interest, with crypto derivatives market open interest increasing by 2% in the past 24 hours to exceed $214 billion. Liquidations also dropped sharply to $280 million, indicating reduced selling pressure and increased confidence among traders.

Bitcoin’s price behavior was further contextualized by its evolving correlation with traditional equities, particularly the S&P 500. Over the past five years, the correlation has frequently exceeded 70%, highlighting the growing interdependence between Bitcoin and broader market sentiment. However, historical data also shows periods of decoupling, especially during major Bitcoin bull runs, when intrinsic factors such as supply constraints and adoption cycles drove its performance independently of equities. Analysts noted that the current range-bound action around $111,300 suggests caution among investors, with a potential breakout above $113,000 signaling renewed momentum.

As the market awaits the upcoming U.S. Consumer Price Index (CPI) data and the Federal Reserve’s policy decision, the crypto market remains sensitive to macroeconomic cues. The recent PPI report, combined with downward revisions to employment figures, has heightened expectations for aggressive rate cuts. This environment appears to be favorable for risk assets, with Bitcoin, Ethereum, and a range of altcoins experiencing upward momentum in response to the shifting macroeconomic landscape.