Bitcoin News Today: Bitcoin Ethereum Retreat After Surging PPI Fuels Inflation Fears

Cryptocurrency markets experienced a sharp reversal in momentum following the release of the July Producer Price Index (PPI), which exceeded expectations and heightened concerns about persistent inflation. The data, showing a 0.9% monthly increase, reinforced the Federal Reserve’s cautious stance on interest rates, causing risk-on assets—including Bitcoin and Ethereum—to retreat from recent gains [1]. Bitcoin, which had traded above $120,000 earlier in the week, dropped to $118,000, while Ethereum struggled to hold above $4,100 [2].

The PPI data reflects rising costs across key sectors, with notable increases in food, energy, and trade services. When excluding these volatile sectors, the PPI still posted its largest rise since March 2022. Final demand services and goods also saw significant growth, with services alone accounting for over 75% of July’s index increase, including a 3.8% rise in machinery and equipment margins [1]. The sharp increase in diesel fuel costs—up 11.8%—further highlighted inflationary pressures in the energy sector.

The immediate fallout for cryptocurrencies was a retesting of critical support levels. Bitcoin is now facing key support at $116,000, and analysts warn that failure to hold above this level could trigger a larger sell-off. Ethereum’s inability to maintain its $4,500 level also signals vulnerability, raising concerns about broader market sentiment [2]. The data has also curbed expectations for a 50 basis point rate cut in September, as officials have reaffirmed a more cautious approach in response to inflationary risks, particularly those linked to ongoing global tariffs [3].

The cryptocurrency market’s sensitivity to macroeconomic signals has become increasingly evident, with digital assets mirroring broader market movements. The sharp pullback following the PPI release highlights the growing influence of traditional economic data on digital asset valuations. Technical indicators show signs of weakening momentum, with Bitcoin’s price behavior suggesting increased volatility and uncertainty [1].

Despite short-term turbulence, the long-term bullish outlook for Bitcoin remains supported by historical performance metrics. A compound annual growth rate of 42.5% has historically outperformed traditional assets like gold and the Nasdaq [3]. However, analysts project a moderation in future returns, with an expected CAGR of around 30% by 2030, reflecting broader macroeconomic uncertainties such as trade policy developments and inflation resilience.

The PPI shock also affected other asset classes, with U.S. Treasury yields falling to a one-week low and the dollar weakening against major currencies. Gold, typically a safe-haven asset, showed limited movement amid improved risk appetite [1]. These cross-asset reactions illustrate the deep interconnectivity between global markets and the central role that U.S. monetary policy plays in shaping investor behavior.

As the market digests the PPI data, attention will turn to the Federal Reserve’s upcoming policy meetings and the release of further inflation and employment data. The path forward for rate cuts remains uncertain, with officials emphasizing the need for more evidence that inflation is on a consistent downward trend. For cryptocurrencies, the ability to maintain value amid macroeconomic volatility will be a critical test of their evolving role in the global financial landscape.

Source:

[1] https://www.morningstar.com/news/dow-jones/202508144037/north-american-morning-briefing-stock-futures-mixed-ahead-of-more-inflation-data

[2] https://www.fastbull.com/news-detail/bitcoins-95k-target-in-sight-as-ugly-price-4339347_0

[3] https://www.coinglass.com/ru/news/533268

[4] https://www.fxmag.com/cryptocurrencies/bitcoin-nears-new-all-time-highs-technical-analysis-and-key-levels-ahead-of-tomorrows-cpi