Bitcoin News Today: Bitcoin Plunges 4% After Hot PPI Dampens Fed Rate-Cut Hopes

Bitcoin’s recent price movement showcased a dramatic rollercoaster as the cryptocurrency hit a new all-time high before experiencing a sharp correction within hours. On August 6, 2025, Bitcoin surged past $124,100, driven by rising investor confidence in anticipated Federal Reserve rate cuts and growing institutional interest in the asset class [2]. This momentum was further fueled by the strong performance of U.S. equities and a favorable regulatory environment [23].

However, the gains quickly reversed on August 10, as Bitcoin dropped by more than 4%, shedding over $5,800 in value and retreating to around $118,427 [1]. The correction was attributed to stronger-than-expected inflation data, which dampened market expectations for an aggressive rate-cutting cycle by the Fed [6]. The Producer Price Index (PPI) for July surged by 0.9%, far exceeding the 0.2% forecast, signaling potential challenges for the Fed in managing inflation [7]. This development led to a recalibration of market pricing for rate cuts, with the probability of a 50-basis-point cut being ruled out and the odds of a 25-basis-point cut falling slightly [9].

Compounding the sell-off, a statement by U.S. Treasury Secretary Scott Bessent clarified that the government would not be purchasing additional Bitcoin, removing a potential catalyst for further price appreciation [5]. This prompted a wave of profit-taking and increased risk-off sentiment among traders, resulting in a flash crash on August 9 that pushed Bitcoin below $120,000 and triggered over $577 million in liquidations within one hour [10]. The volatile price action erased all gains from the previous two days and highlighted the sensitivity of the cryptocurrency market to macroeconomic developments and institutional signals [3].

The broader financial markets mirrored Bitcoin’s turbulence, with equities initially rebounding from intraday lows but ending the session mixed. The S&P 500 closed at a record high, while the Nasdaq Composite and Dow Jones Industrial Average posted marginal declines [14]. Fed officials remained cautious, with St. Louis Fed President Alberto Musalem indicating a lower inflation risk but a higher risk in the labor market, without committing to a September rate cut [16]. Meanwhile, investors and analysts continued to closely watch for further economic data and potential shifts in Fed policy, which could reignite the bullish momentum seen earlier in the week [8].

The BTC futures annualized premium remained within the neutral 5%–10% range despite the price drop, suggesting traders remained relatively calm and that the rally was not driven by excessive leverage [2]. Additionally, the Bitcoin options delta skew stood at 3%, indicating a balanced risk outlook and no immediate bearish sentiment [2]. This implies traders were not overly fearful of a deeper pullback, despite repeated failures to maintain price above $120,000.

The events underscore the interconnectedness between Bitcoin and traditional financial markets, particularly in response to macroeconomic data and central bank policy expectations. As Bitcoin and other cryptocurrencies continue to attract institutional and retail attention, their price behavior remains highly responsive to broader economic signals and market sentiment shifts [1]. The episode also highlights the importance of liquidity and risk management in a market where large price swings can occur rapidly.

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[1] Here's Why Bitcoin Has Corrected 4% Despite Reaching an All-Time High Today https://thecryptobasic.com/2025/08/14/heres-why-bitcoin-has-corrected-4-despite-reaching-an-all-time-high-today/

[2] Bitcoin hits all-time high before diving 5% on inflation fears https://www.aol.com/bitcoin-hits-time-high-diving-181123565.html

[3] Bitcoin (BTC) Price Pulls Back After Hitting $124K https://captainaltcoin.com/bitcoin-btc-price-pulls-back-after-hitting-124k-heres-whats-driving-the-drop/

[5] Bitcoin Price Collapses After Bessent's Most Recent Statement https://u.today/bitcoin-price-collapses-after-bessents-most-recent-statement

[6] Bitcoin drops after hot wholesale inflation data dampen ... https://seekingalpha.com/news/4485490-bitcoin-drops-after-hot-wholesale-inflation-data-dampen-fed-rate-cut-bets

[7] Wholesale inflation rises much more than expected https://www.cnbc.com/2025/08/13/stock-market-today-live-updates.html

[10] Bitcoin's 5% flash crash to $118k triggers $577 million ... https://cryptoslate.com/bitcoin-flash-crash-to-118k-triggers-577m-liquidation-in-1-hour/

[23] Bullish breaks the market: Stock jumps 90% triggering ... https://m.economictimes.com/news/international/us/bullish-ipo-latest-news-bullish-breaks-the-market-stock-jumps-90-triggering-circuit-breaker-and-m-cap-hits-10-billion-crypto-news/articleshow/123304062.cms