Bitcoin Falls Below $80,000 as U.S. PPI Far Exceeds Forecasts

The Personal Consumption Expenditures (PCE) price index, released by the US Commerce Department's Bureau of Economic Analysis (BEA), is a key gauge used by the Federal Reserve to assess inflation and set interest-rate policy. The May reading rose to a three-year high, cooling expectations for the timing of rate cuts. US stocks weakened, weighing on risk assets and exposing Bitcoin to concentrated selling pressure.

Bitcoin plunged to $58,000 following the US May PCE data, marking a 21-month low, while inflation concerns also sent US stocks lower in volatile trading. The rapid correction triggered cascading closures of leveraged positions, with more than $600 million liquidated across the cryptocurrency market in just one hour. Some traders questioned whether the market had been “manipulated.”

The U.S. Producer Price Index (PPI) measures changes in the prices businesses receive for goods and services and is often viewed as a leading indicator of consumer inflation. If upstream costs continue to climb, the Federal Reserve could delay rate cuts or even resume raising rates, lifting the dollar and U.S. Treasury yields while squeezing valuations and market liquidity for risk assets such as bitcoin.

The latest data from the U.S. Bureau of Labor Statistics showed that the PPI rose 6.5% year on year in May, its largest increase since 2022 and in nearly three years, driven mainly by higher energy prices. The figures intensified concerns about a resurgence in inflation and strengthened expectations of Fed rate hikes, putting bitcoin and the global cryptocurrency market under pressure from sharp price declines and capital outflows.

Bitcoin (BTC) is highly sensitive to inflation and interest-rate expectations. A smaller-than-expected increase in the U.S. Producer Price Index (PPI) signaled easing upstream price pressures and raised expectations of a shift toward looser monetary policy, lifting risk assets including cryptocurrencies. The $76,000 level has become a key test of whether the rebound can continue.

In the latest rally, BTC briefly broke above $76,000 after the U.S. PPI release, posting its strongest performance since mid-March, but it subsequently failed to hold that level. On-chain analytics firm CryptoQuant warned of mounting near-term selling pressure, while traders realized profits on roughly 63,000 BTC during the advance. The market is now watching whether Bitcoin can regain a firm foothold above $76,000.

Bitcoin is highly sensitive to interest rates, inflation and risk-aversion. The situation in Iran has pushed up energy prices, potentially adding to U.S. inflationary pressure and limiting the Federal Reserve’s scope to cut rates. Markets are therefore weighing the combined impact of the Middle East conflict, oil prices and monetary policy on crypto-asset liquidity.

On Wednesday, March 18, reports of attacks on Iranian energy facilities and a higher-than-expected U.S. producer price index for February triggered a risk-off move. Bitcoin (BTC) retreated from $74,000 and briefly touched $72,300 before hovering near $72,500. The Fed later left interest rates unchanged, with markets alert to the risk of selling after the anticipated positive catalyst had passed.

Bitcoin and risk assets such as U.S. stocks are highly sensitive to the outlook for U.S. interest rates. A hotter-than-expected Producer Price Index from the U.S. Labor Department pushed back market expectations for Federal Reserve rate cuts. Persistent bond-market concerns over inflation and broader economic risks drove capital toward safe-haven assets such as gold, putting cryptocurrencies under selling pressure.

Bitcoin initially fell to about $65,000 in a weekend sell-off, while Solana, XRP and Dogecoin each dropped about 6%. Although Bitcoin and U.S. stocks briefly stabilized afterward, the cryptocurrency failed to hold above $66,000. Market analysis remained cautious on March 27, with Bitcoin holders' unrealized losses estimated at $600 billion. Only some AI-related tokens continued to attract buying interest.

The US Labor Department's producer price index (PPI) for January rose more than the market expected, indicating that business costs and inflationary pressures remain persistent. Investors responded by scaling back expectations for near-term Federal Reserve rate cuts, pulling money from volatile risk assets such as Bitcoin and turning to precious metals as a haven.

Bitcoin fell nearly 3% at one point after the January PPI data was released and approached another technical breakdown zone. Gold climbed to around a one-month high, while silver also advanced. Markets are now focused on the Federal Reserve's next interest-rate signals and whether persistent inflation will further delay rate cuts.