tl;dr
Bitcoin fell 1.3% to $102,655 after U.S. wholesale prices dropped 0.5% in April, contrary to expectations of a 0.2% rise. The Producer Price Index (PPI) decline was driven by a 0.7% fall in services, particularly trade services like machinery and vehicle wholesaling. Ethereum, Solana, and Avalanche ...
Bitcoin and major cryptocurrencies slipped after the U.S. Producer Price Index (PPI) reported a larger-than-expected 0.5% drop, signaling easing wholesale inflation. The decline was mainly driven by a 0.7% fall in services, especially a steep 6.1% plunge in machinery and vehicle wholesaling margins. Bitcoin fell 1.3% to $102,655 following the report, while Ethereum, Solana, and Avalanche also retreated. Meme coins traded quietly amid the shifts.
Analysts suggest the PPI report alone is unlikely to meaningfully impact Bitcoin’s trajectory without a major surprise, given the market’s muted response to recent CPI data. The market’s attention has shifted toward Federal Reserve Chair Jerome Powell’s remarks, which could sway investor sentiment depending on his tone about future rate cuts. Powell reaffirmed the Fed’s commitment to a 2% inflation target while emphasizing the need for clearer communication amidst ongoing economic uncertainties.
The PPI, a leading gauge of wholesale inflation based on over 100,000 product prices, showed the steepest-ever drop in services since 2009. Despite this, analysts caution that only significant deviations from expectations could alter Bitcoin’s direction or Fed rate cut outlook.
Following recent tariff rollbacks between the U.S. and China and moderate CPI data, investors are advised to seek better entry points rather than chase current strength amid uncertainty. The upcoming release of the Personal Consumption Expenditures (PCE) index on May 30, the Fed’s preferred inflation gauge, is highly anticipated for clearer signals on monetary policy.
Analysts warn that Bitcoin’s recent rally lacks a meaningful correction, and a 2% retracement could occur as caution rises. Should Powell signal no urgency to ease policy, markets might turn defensive, potentially triggering shakeouts among overheated altcoins and a test of Bitcoin support levels near $97,000 to $93,000.
In summary, while the PPI decline underscores easing wholesale inflation pressures, the cryptocurrency market’s next moves hinge heavily on Federal Reserve communication and upcoming inflation data, urging investors to tread carefully amid evolving economic signals.