Bitcoin Gets Second Inflation Boost as US PPI Sparks Three-Week Highs

Bitcoin (BTC) saw three-week highs on Wednesday as US inflation data beat expectations for a second day.

Key points:

• Bitcoin sees copycat bullish price action as US inflation data cools for a second day running.
• Risk assets get a more positive outlook as Fed rate-cut odds drop.
• Traders stay conservative over Bitcoin’s ability to continue higher.

Bitcoin gains after “much better-than-expected” US PPI

Data from TradingView showed BTC/USD reaching $65,500 for the first time since June 22.

BTC/USD 12-hour chart. Source: Cointelegraph/TradingView

The June print of the Producer Price Index (PPI) came in cool at 5.5% year-on-year after a 0.3% monthly decrease, per data from the Bureau of Labor Statistics (BLS).

“The June decline in the index for final demand can be attributed to prices for final demand goods, which fell 1.4 percent. In contrast, the index for final demand services moved up 0.2 percent,” an official news release stated.

PPI one-month % change. Source: BLS

Reacting, economist Mohamed El-Erian was upbeat on the outlook for risk assets and Federal Reserve policy.

“These much better-than-expected figures are set to boost equities and further temper market expectations for upcoming interest rate hikes,” he wrote in a post on X.

PPI joined Tuesday’s Consumer Price Index (CPI) release, which surprised to the downside despite macro pressure from the US-Iran war and its impact on oil prices.

“Inflation expectations continue to decline,” trading resource The Kobeissi Letter added, referencing bets on a Fed interest-rate hike from users of prediction service Polymarket.

The latest data from CME Group’s FedWatch Tool also showed change afoot in expectations for the Fed’s September decision, with a 0.25% hike no longer the most likely option.

Fed target rate probability comparison for September FOMC meeting (screenshot). Source: CME Group

BTC price momentum battles bear-market history

Assessing current BTC price action, market participants avoided overly bullish takes.

Related: Bitcoin gets new $80K August target: Watch these BTC price levels next

“Liquidity sitting above at the $65.6K mark and most importantly, the $67.2K mark,” trader Daan Crypto Trades wrote on X, referring to exchange order-book liquidity.

“Breaking above the latter would turn this into a bigger move and we can start targeting the $70K+ region again and truly position Bitcoin in the middle of its $60K-$80K range.”

BTC/USDT perpetual contract four-hour chart. Source: Daan Crypto Trades/X

Trader and analyst Rekt Capital noted that BTC was approaching its 50-month exponential moving average (EMA) — a level from which the price should be rejected if bear-market history were to repeat.

“If we follow the same statistical pattern seen over the past 12 months, BTC would likely derisk for the remainder of the month and push back down,” trader Killa added on the topic.

BTC chart. Source: Killa/X