Breaking: Bitcoin Retraces As US PPI Inflation Soars To 6.5% Ahead FOMC Meeting
Highlights
- The U.S. Producer Price Index jumped 6.5% year-over-year in May, surpassing Wall Street forecasts of 6.4%.
- Bitcoin price slipped as markets were shaken by hotter-than-expected inflation data.
- Now, the market is eyeing the upcoming FOMC meeting on June 16-17.
Bitcoin fell hard on Thursday following some new U.S. inflation data that surpassed Wall Street estimates. The rise in inflation suggests that the Federal Reserve may keep a hawkish policy stance in the future.
Bitcoin Tumbles As US PPI Inflation Hits Record High
The Producer Price Index (PPI) rose 1.1% in May, according to data from the U.S. Bureau of Labor Statistics. It is much higher compared to a 0.6% monthly gain forecast by Wall Street analysts.
Moreover, U.S. inflation rose 6.5% year-over-year, exceeding the 6.4% expectations of analysts. It was also far higher than the previous rate of 6.0% and marked the highest level since November 2022. The Core PPI, which excludes volatile food and energy costs, also increased by 0.8%. It was also hotter compared to the estimates of a 0.4% rise.
The robust inflation data sent risk assets on a roller coaster ride with cryptocurrencies being no exception. Shortly after the data release, Bitcoin returned to the $62,500 level after earlier surging above $63,000.
This BTC price drop also created a red candle on the 15-minute timeframe chart. It indicated high short-term selling pressure for Bitcoin in response to the inflation shock ahead of the FOMC meeting. However, at press time, BTC was trading at $62,564.14, still showing a 1.79% gain in the 24-hour chart.
What’s Next For The June Fed Meeting?
Now, the market has turned to the next FOMC decision on June 16-17. The meeting will also be the first under Trump-backed Fed Chair Kevin Warsh.
Ahead of the release of inflation data, analysts were anticipating the Fed would leave interest rates unchanged. The new PPI inflation data, however, could make the central bank’s job more difficult in the future.
Moreover, if inflation pressures continue to pick up in the months ahead, it could adopt a hawkish stance. Bitcoin and the overall crypto market could struggle in case the Fed turns hawkish. The market sentiment is mixed as the U.S. CPI data came in softer-than-expected on Wednesday, June 10.
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