Bitcoin News Today: Bitcoin drops 5.8% as Fed rate cut odds decline and US PPI hits three-year high

Generated by AI AgentCoin World
Saturday, Aug 16, 2025 1:16 pm ET1min read
Aime RobotAime Summary

- Bitcoin fell 5.8% as Fed rate-cut odds dropped on Polymarket, with prices dropping to $117,156.

- Strong US PPI data and rising inflation expectations fueled fears of stagflation and weakened rate-cut hopes.

- Technical indicators showed bearish patterns, signaling potential further declines before a rebound.

- Fed officials emphasized needing more data on tariffs' impact, maintaining a cautious stance on cuts.

- Cryptocurrencies remain sensitive to Fed policy, with Bitcoin's volatility expected until a clear path emerges.

Bitcoin experienced a significant pullback this week amid shifting expectations regarding the Federal Reserve’s potential rate-cutting path. As the odds of a September rate cut declined on the prediction market platform Polymarket, the cryptocurrency retreated from an all-time high of $124,420 to as low as $117,156 by August 16 [1]. The decline coincided with the release of strong producer price index data, which raised concerns about inflationary pressures and weakened the case for an imminent rate cut [4].

Bitcoin’s performance has historically been positively correlated with falling interest rates or expectations of rate cuts. However, with the September cut probability dropping from 80% to 70% in just a few days, traders began reassessing their positions, leading to a broader market correction [1]. This shift was further exacerbated by a three-year high in the U.S. Producer Price Index (PPI), which increased fears of stagflation—a scenario of high inflation and weak economic growth [4]. Inflation expectations, as measured by the University of Michigan, also rose sharply, with five- to ten-year expectations hitting 3.9%, contributing to market uncertainty [1].

The technical outlook for

Bitcoin
also painted a mixed picture. On the daily chart, the price had formed a bearish double-top pattern near $123,200, with a critical support level at $112,000. Additionally, bearish divergence was evident in the RSI and MACD indicators, both showing lower highs and lower lows. These signals suggested that further downside could occur before a potential rebound [4]. Analysts noted that a resumption of the uptrend would depend on Bitcoin reclaiming the $124,420 level [4].

Fed officials, including FOMC member Austan Goolsbee, have emphasized the need for more data to assess the impact of recent tariffs on the U.S. economy, which have contributed to rising costs for businesses and consumers [1]. Meanwhile, San Francisco Fed President Mary Daly has indicated support for a modest 25 basis point cut but has ruled out a 50 basis point move, reinforcing the central bank’s cautious stance [2]. This lack of clarity has kept investors in a state of flux, with many adjusting exposure based on evolving economic signals.

The broader implications for the market highlight the continued sensitivity of cryptocurrencies to monetary policy developments. As the Fed weighs its next move against a backdrop of high inflation and mixed economic indicators, Bitcoin’s price will likely remain volatile until a clearer path emerges [4].

Source:

[1] Bitcoin derails, Polymarket Fed interest rate cut odds fall (https://crypto.news/bitcoin-polymarket-fed-interest-rate-cut-odds-fall/)

[2] Real Estate Morning Update Friday, August 15, 2025 (https://www.instagram.com/p/DNYTJOJRNJ3/)

[4] US PPI hits three-year high, impacting rate cut expectations (https://www.coinlive.com/news/us-ppi-hits-three-year-high-impacting-rate-cut-expectations-crypto)