Bitcoin Gains As US PPI Comes Lower Than Expected At 4.5%

Bitcoin surged on Thursday following new US producer inflation data that fell shy of economists’ forecasts and helped alleviate fears of continued price pressures. The less hawkish stance may ease market worries about the Fed’s stance and boost risk assets such as cryptocurrencies.

US PPI Comes In Cool

The US Producer Price Index for final demand tumbled back to unchanged levels as forecast was for a 0.2% rise in July. The annual increase in producer prices was 4.7%, which is below the estimated 4.9%. Without food and energy, the Core PPI rose 0.2% from June, representing the smallest monthly gain since June 2015. This annual core reading was at 4.2%, in line with expectations.

The unchanged headline PPI was driven by falling prices in goods, while goods prices increased across services and construction, the official data revealed. Final-demand goods prices declined 0.7% in July, but services prices rose 0.2%.

Prices for energy came in as another big negative contributor dropping 3.1% for the month. The overall reduction in final-demand goods was led by a 5.7% fall in gasoline prices.

Impact On Bitcoin, Crypto Market

Following the release, Bitcoin price was up 0.58% at $63,728.09. The move coincides with a likely positive response from crypto traders, as easing producer inflation may take the pressure off the Federal Reserve to keep rates restrictive.

If prices were to settle down, that could lead to more interest-rate cuts, making riskier assets more attractive. If this is true, then Bitcoin would benefit from lower rates that would make investors move more capital toward more volatile and higher yielding assets.

However, the inflation situation is not entirely positive. Prices excluding food, energy and trade services rose 0.4% in July and were 4.7% higher than they were a year earlier. So, although the new PPI was a positive sign for cryptocurrencies, the market will keep an eye on the next inflation and economic data for a global cooling trend.