US PPI Data Sparks Crypto Sell-Off
On Thursday morning, the latest U.S. Producer Price Index (PPI) report sent shockwaves through the cryptocurrency market, causing over $500 million in liquidations in just one hour. The hotter-than-expected inflation data has dashed hopes for Federal Reserve interest rate cuts, leading to a bearish trend in the market.
The July PPI figures came in much higher than anticipated, with a 0.9% increase compared to the expected 0.2%. This surge, along with a 3.3% rise from last year, has raised concerns about rising inflation pressures and prompted a rally in the U.S. dollar.
Core PPI, which excludes volatile food and energy prices, also saw a significant jump of 0.9%, well above the expected 0.2%. This unexpected increase has fueled speculation that the Federal Reserve may need to maintain higher interest rates to combat inflation.
Experts have pointed to the impact of previous tariffs as a contributing factor to the inflation spike. The fear of prolonged rate hikes to curb inflation has led investors to shift towards safer assets, causing a sell-off in cryptocurrencies like Bitcoin and Ether.
Crypto Liquidations Surge
Following the release of the PPI report, Coinglass reported a massive wave of liquidations in the crypto market. In just one hour, over $580 million in trading positions were wiped out, with the majority of losses coming from long positions.
The sudden drop in Bitcoin’s price, which fell below $119,000 after reaching a record high, caught many investors off guard. Altcoins like Ether, Solana, and XRP also experienced significant declines as market sentiment turned bearish.
Despite the sell-off, the CME FedWatch tool still predicts a high probability of a rate cut on September 17. However, the strong job market data and inflation concerns may force the Federal Reserve to reconsider its monetary policy stance.
Overall, the recent market turmoil highlights the volatility and sensitivity of the cryptocurrency market to economic data releases and policy changes. Investors will need to closely monitor developments and adapt their strategies accordingly to navigate these uncertain times.