According to the latest data from the U.S. Department of Labor, the producer price index (PPI) inflation rate in September was 1.8%, higher than the market's expected 1.6%, triggering concerns in the market about the future trend of cryptocurrencies such as bitcoin. With rising inflation, especially after recent U.S. CPI data also exceeded expectations, the market is beginning to worry whether the Federal Reserve will adopt a tighter monetary policy in the future.
Discussion sparked by PPI exceeding expectations.
The data shows that the U.S. September PPI inflation rate rose from 1.7% in August to 1.8%, while the month-on-month increase remained at 0.0%, unchanged from the previous month's 0.2%. At the same time, the core PPI (excluding food and energy) inflation rate surged to 2.8%, exceeding the expected 2.6%, with a month-on-month increase of 0.2%, slightly lower than August's 0.3%. These data have sparked widespread discussions in financial markets, especially in the cryptocurrency market.
Bitcoin price faces pressure.
The latest PPI data has brought pressure to the market, with the re-rise in inflation causing investors to worry about the potential downside risks for Bitcoin in the future. Market expectations for the Federal Reserve to maintain a hawkish stance at the upcoming meeting are rising, with a possibility of a smaller rate cut, or even a possibility of pausing the rate cut.
Despite this, as of now, the price of Bitcoin remains around $62,000, with a 6% increase in trading volume in the past 24 hours, reaching 30.4 billion USD. The lowest touched was $58,895 and the highest was $61,383.
Market reactions and future prospects.
Following the release of inflation data, the U.S. 10-year treasury notes yield rose slightly by 0.34% to 4.109%, while the USD index fell marginally by 0.03% to 102.737. According to CME Group's FedWatch Tool, there is an 88% possibility of the Fed cutting rates by 25 basis points at the next meeting, with only 12% of the market believing otherwise. Previously, some market participants even anticipated a 0.5% rate hike.
Overall, the latest employment and inflation data have raised concerns in the market about the Fed adopting a tightening policy. The focus going forward will be on Fed officials' statements, as the market will seek more clues about future interest rate policies from them.
