The cryptocurrency market is facing a new wave of uncertainty following the release of the Producer Price Index (PPI) data, which has negatively impacted digital asset prices.
What Caused the Cryptocurrency Decline?
The PPI data showed an unexpected monthly increase of 0.9%, which is a crucial factor for assessing inflation for the Federal Reserve. This creates conditions for Fed Chair Jerome Powell to maintain current interest rates, as rising tariffs can impact inflation risks. The drop in Bitcoin from over $120,000 to $118,000 also raises concerns among investors about future economic indicators, particularly as Ethereum struggles to hold the $4,100 support level.
Will Interest Rates Shift Due to PPI Data?
Despite speculations about a 50 basis point rate cut, the unexpected rise in PPI has cooled those expectations. The Fed's cautious approach and confidence in strong employment figures highlight concerns regarding tariff-induced inflation. In July, the PPI recorded its most significant rise since February 2025, reflecting substantial increases in food, energy, and trade services.
Analysis of Current Market Trends
The rise in final demand services and goods underscores unexpected tariff impacts. A 1.1% rise in services contributed to over three-quarters of the index increment in July. It is expected that the effects of PPI data will be taken into account in the upcoming Fed meeting in September. Further PPI hikes may impact the Fed's decision regarding rates, potentially challenging risk markets.
The cryptocurrency market is in a state of uncertainty following recent PPI data, emphasizing the influence of tariffs on inflation. Expected decisions from the Fed may either alleviate or exacerbate current trends in the market.
