Bitcoin slips below $80,000 after US PPI surprise

Bitcoin fell below $80,000 on Wednesday as U.S. producer prices unexpectedly accelerated in April, pushing the cryptocurrency and other risk assets lower. TradingView data showed BTC briefly trading near $79,500 around the Wall Street open.

The U.S. Bureau of Labor Statistics reported the April monthly increase in the Producer Price Index was the largest since March 2022. On an unadjusted basis, the index for final demand rose 6.0 percent over the 12 months ended in April, the largest 12-month increase since December 2022.

The PPI surprise followed a hotter-than-expected Consumer Price Index print the day before and reduced market expectations for an interest-rate cut at the Federal Reserve’s June meeting. CME Group’s FedWatch Tool showed the probability of a June rate cut fell to about 1.4 percent.

Mosaic Asset Company wrote that rising oil prices could push interest rates higher along the curve and present headwinds for stock market valuations. Traders and analysts linked the higher producer prices in part to recent geopolitical developments that have lifted oil prices.

Market participants pointed to technical resistance around a CME futures gap in the low-to-mid $80,000s. One analyst wrote that a break above roughly $82,000 could lead to filling the gap near $84,000. Another analyst noted Bitcoin had closed below the top of a defined range and would likely consolidate within the CME gap until further notice.

The Kobeissi Letter wrote the inflation data would squeeze household budgets and put renewed pressure on consumer spending. The PPI increase, coming after two hotter inflation prints, coincided with declines in risk assets, including equities and cryptocurrencies.

Producer price inflation measures price changes received by domestic producers for goods and services and can pass through supply chains to consumer prices. A CME futures gap forms when settlement prices leave an untraded range on exchange-traded futures; some traders treat such gaps as short-term magnets that can attract spot prices back to fill them.