Cryptos Tumble as PPI June 2023 Cools Down

Recent data reveals the calming of inflation rates, with intriguing reverberations most noticeably within the crypto market. Bitcoin and Ethereum enjoyed a brief rally, only to relinquish these gains shortly after.

Strangely, this crypto market fluctuation does not mirror the United States economy’s evident shift toward a disinflation phase.

Bitcoin, Ethereum Volatility Spike After Soft PPI

In a surprising turn, the top cryptocurrencies saw a modest spike in volatility as key US inflation data displayed a cooling trend.

Bitcoin, the world’s largest cryptocurrency, saw a 0.60% rise, nudging from $30,500 to $30,683. Ethereum, its closest competitor, experienced a 0.39% jump, inching from $1,880 to $1,887. The overall crypto market followed suit, with the total market capitalization witnessing a 0.44% leap from $1.153 trillion to $1.158 trillion.

Following the price jump, a downswing ensued, erasing nearly all the gains made post the release of the Bureau of Labor Statistics’ Producer Price Index.

The spike in volatility comes as US producer prices in June registered only a minute increment. Subsequently evidencing the entrance of the economy into a disinflation phase. The annual increase in producer inflation was its smallest in nearly three years, bringing about a shift in investor sentiment.

The US Labor Department reported that the Producer Price Index for final demand nudged by a mere 0.1% in June.

The preceding month’s data was revised to reflect a 0.4% fall in the PPI, in contrast to the initially reported 0.3% dip. The year-on-year rise for June stood at 0.1%, the tiniest increase since August 2020.

Contrary to economists’ predictions, the inflation rates appeared to be easing. This cooling of PPI June is attributed to the disappearance of supply chain bottlenecks and slowing demand for goods spurred by rising interest rates.