US producer prices rose more sharply than expected in July, adding to signs that inflationary pressures may be picking up again.
The Producer Price Index (PPI) for final demand climbed 0.9% from June, marking the largest monthly gain since early 2022. On a yearly basis, wholesale prices advanced 3.3% – the fastest pace in over two years.
Core PPI, which excludes food, energy, and trade services, also saw a strong 0.6% monthly increase and was up 2.8% year-over-year, suggesting underlying price pressures remain firm.
Why This Matters for Crypto
In traditional markets, hotter-than-expected PPI data often fuels speculation that the Federal Reserve could delay interest rate cuts or even keep rates elevated for longer. Higher borrowing costs tend to weigh on risk assets, including cryptocurrencies, as liquidity tightens.
For Bitcoin and Ethereum, the near-term reaction could depend on whether investors interpret the data as a sign of persistent inflation – which might pressure markets – or as evidence of economic resilience, which could keep risk appetite intact.
Potential Market Scenarios
- Bearish case: If traders believe the Fed will stay hawkish, crypto prices could face selling pressure as investors rotate into safer assets.
- Neutral case: The market could consolidate if investors balance the inflation risk with ongoing institutional demand for Bitcoin and Ethereum.
- Bullish case: If inflation concerns drive investors toward assets seen as hedges against currency debasement, Bitcoin could benefit, especially given its “digital gold” narrative.
To conclude – in the short-term a wave of liquidations and a correction is expected.
The information provided in this article is for informational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.
Source: https://coindoo.com/hot-us-ppi-data-puts-crypto-rally-to-the-test/