Four-Year Highs In US PPI Data Cost Bitcoin the $80,000 Mark

Bitcoin (BTC) fell below $80,000 into Wednesday’s Wall Street open as US inflation data continued to alarm.

Key points:

• Bitcoin price action sees fresh downside pressure thanks to US PPI inflation reaching its highest since 2022.
• Odds of further financial tightening by the Federal Reserve increased in a headwind for crypto.
• BTC price analysis sees the CME futures gap staying as resistance “until further notice.”

BTC price action loses $80,000 in fresh inflation blow

Data from TradingView showed a trip to near $79,500 accompanying the April release of the Producer Price Index (PPI).

BTC/USD one-hour chart. Source: Cointelegraph/TradingView

Like the Consumer Price Index (CPI) print the day prior, PPI delivered a surprise to the upside — a headwind for crypto and risk assets due to the implied future tightening of financial conditions by the Federal Reserve. 

“The April increase is the largest advance since rising 1.7 percent in March 2022,” an official news release from the US Bureau of Labor Statistics (BLS) stated. 

“On an unadjusted basis, the index for final demand rose 6.0 percent for the 12 months ended in April, the largest 12-month increase since moving up 6.4 percent in December 2022.”

US PPI one-month % change. Source: BLS

The US-Iran war and its associated impact on oil prices thus continued to filter through to the economy, with even more serious upheaval to come.

“All of the data is very clear: consumers are about to face another wave serious pressure on spending power,” trading resource The Kobeissi Letter wrote in a reaction on X.

The results further reduced the odds of the Fed cutting interest rates at its June meeting, with just a 1.4% chance of that outcome, per data from CME Group’s FedWatch Tool. 

Fed target rate probabilities for June 17 FOMC meeting (screenshot). Source: CME Group

On Monday, trading resource Mosaic Asset Company summarized the risk that high oil prices, in particular, pose to the risk-asset uptrend.

“The prospect of rising interest rates on the short- and long-end of the yield curve could pose a challenge to stock market valuations,” it wrote in the latest edition of its regular newsletter, The Market Mosaic. 

“The easing bias in central banks around the world is shifting to a more hawkish stance.”

CFDs on WTI crude oil one-day chart. Source: Cointelegraph/TradingView

Bitcoin futures gap in control “until further notice”

Bitcoin traders maintained hope for a successful breakout from current resistance for BTC/USD.

Related: Bitcoin price history suggests 77% odds of new all-time high within a year

“Break above that ~$82K region and that gap at $84K will surely be filled. Likely continuing quite a lot higher at that point,” Daan Crypto Trades wrote in his latest X analysis.

Daan Crypto Trades described US stocks as recovering “nicely” from their initial weakness over the CPI data.

“Market mostly awaiting some clarity in regards to the conflict in the middle east,” he added.

BTC/USDT perpetual contract one-day chart. Source: Daan Crypto Trades/X

Trader and analyst Rekt Capital, meanwhile, saw BTC/USD moving within an open “gap” in CME Group’s Bitcoin futures market — a common short-term price magnet.

“Bitcoin finally Weekly Closed below the top of the red area, confirming that price will be consolidating within the CME Gap until further notice,” he told X followers.

CME Bitcoin futures one-week chart. Source: Rekt Capital/X