Breaking: US PPI Inflation Eases to 2.2%, Bitcoin Price Rally Imminent?

The latest U.S. Producer Price Index (PPI) index data showed that the inflation has cooled to -0.2% in May, while the market was expecting a surge of 0.1%. Notably, the cooling inflation data has fueled optimism in the market over a potential dovish stance by the Federal Reserve.

In addition, the latest U.S. CPI data also boosted market confidence. Despite that, the latest remark from Fed Chair Jerome Powell appears to dampen hope, as he signals only one rate cut in 2024 as the inflation still remains at the top of their 2% target range.

US PPI Inflation Drops To Lowest Level Since October 2023

The latest data by the Bureau of Labor Statistics showed that the U.S. PPI inflation fell 0.2% in May after soaring 0.5% in April. Notably, this marks the largest drop since October last year. On an unadjusted basis, the inflation cooled to 2.2% in May as compared to 2.3% in the prior month. Besides, the market was expecting the annual PPI inflation to come in at 2.5%.

On the other hand, the Core PPI, excluding the food, energy, and trade services, remains unchanged from the prior month. In addition, the core PPI annual rate in May eased to 2.3% as compared to the 2.4% figure noted in April. The market was also expecting the Core PPI annual rate to come in at 2.4%.

Although the latest U.S. PPI inflation data signals that the inflation is cooling, it appears that the market is taking a cautious approach as it still stays above the Fed’s target range. Despite the Fed’s dot plot still indicating two rate cuts this year, the recent Fed Chair’s comment appeared to have weighed on the investors’ sentiment.

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What’s Next For Bitcoin Price?

Bitcoin has noted a strong recovery following yesterday’s cooling U.S. CPI inflation data. However, despite today’s data signaling that the U.S. PPI inflation has also cooled, the market faces heightened volatility.

According to market experts, investors are seeking further clarity before putting their bets into the sector. In addition, the recent hawkish signal from the Fed Chair has further weighed on the market sentiment. Notably, following the PPI inflation data, the U.S. 10-year Bond Yield decreased by 0.49% to 4.273, while U.S. Dollar Index Futures fell 0.15% to $104.475.

However, despite the cooling PPI inflation figures, Bitcoin price retreated 2.53% to $67,750.82. The altcoins, including Ethereum, Solana, XRP, and Dogecoin, also followed suit. Amid the drop in the major crypto prices, the global crypto market fell 2.77% to $2.45 trillion.

Meanwhile, despite the recent decline, the market experts anticipate a potential rally in the Bitcoin price. Despite the hawkish remarks, the cooling inflation data signals that the Fed may soon take a dovish stance, which could propel a rally in the broader crypto market, let alone Bitcoin price.

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