Bitcoin News Today: Bitcoin Falls 7% as U.S. Inflation Hikes Pressure Rate Cut Prospects

Bitcoin's recent momentum has shown signs of cooling as U.S. inflation data exceeded forecasts, casting doubt on the likelihood of a major Federal Reserve rate cut in the coming months. On August 15, 2025, the cryptocurrency experienced a sharp correction, with Bitcoin dropping nearly 7% in a single session and triggering over $930 million in liquidated leveraged positions. This sell-off followed a 3.3% year-over-year rise in the Producer Price Index (PPI), signaling ongoing inflationary pressures and prompting market participants to reassess their outlook [1].

The sell-off was further compounded by mixed messaging from U.S. Treasury leadership, particularly from Treasury Secretary Scott Bessent, who indicated the U.S. would not expand its strategic Bitcoin reserve despite the asset’s rising prominence in global finance. This created policy uncertainty, amplifying risk-off sentiment and contributing to broader market volatility [1]. The CME FedWatch tool noted a sharp decline in the probability of a 25-basis-point rate cut at the September 17 meeting, dropping to 90.5% from nearly 100% before the inflation data was released [1].

Despite the pullback, institutional involvement in the market remains robust, with derivatives open interest hitting $32.5 billion. This suggests continued engagement from professional traders and hedgers, even amid heightened volatility. Altcoins, including AERO, saw increased liquidity during the downturn, while on-chain activity on platforms like Avalanche and Starknet surged as new token offerings attracted capital flows [1].

Bitcoin's year-to-date gain stands at approximately 25%, with a rally of nearly 57% from its April lows. However, the market appears to be responding to macroeconomic signals with heightened sensitivity. Tom Essaye, founder of Sevens Report Research, acknowledged the short-term volatility but stressed that long-term fundamentals—including growing institutional adoption and regulatory progress—remain bullish for Bitcoin [1].

The U.S. equity market also saw a pause in its rally following the inflation data, with broader economic uncertainty spilling into crypto markets. Ethereum, the second-largest cryptocurrency, also retreated from recent highs, mirroring Bitcoin’s correction. Analysts continue to monitor how the current correction might influence future price action, with some suggesting that a stabilization in macroeconomic conditions could set the stage for renewed upward momentum [6].

Historical patterns from 2022 and 2023 show similar volatility linked to inflation data and policy shifts. With $12 billion in BTC options set to expire on August 31, the market may experience further turbulence as traders adjust positions ahead of key events [1]. For now, investors are navigating a more cautious environment, with inflationary pressures likely to extend the current phase of tight monetary policy.

Sources:

[1] Bitcoin sinks following hotter-than-expected inflation print (https://finance.yahoo.com/news/bitcoin-sinks-following-hotter-than-expected-inflation-print-bessent-comments-on-strategic-reserve-171107469.html)

[2] Bitcoin drops 1% amid U.S. inflation data and $1B (https://www.ainvest.com/news/bitcoin-news-today-bitcoin-drops-1-inflation-data-1b-liquidations-2508/)

[5] Stock Rally Stumbles as Inflation Report Tempers Rate-Cut (https://www.investopedia.com/dow-jones-today-stocks-08142025-11790735)

[6] Bitcoin Correction May Set the Stage for the Next Rally (https://m.fastbull.com/analyst-article/bitcoin-correction-may-set-the-stage-for-the-4339759_0)

[7] Stock Rally Hits a Wall as US Inflation Picks Up: Markets (https://www.swissinfo.ch/eng/stock-rally-hits-a-wall-as-us-inflation-picks-up%3A-markets-wrap/89831025)