US PPI Inflation Drops to 2.2%, Is Bitcoin Price Rise near?
The latest US Producer Price Index (PPI) index data shows that inflation fell to -0.2% in May, while the market expects a 0.1% increase. In particular, cooling inflation data increased market optimism regarding the Fed’s possible dovish stance.
Additionally, the latest CPI data in the USA also increased market confidence. Despite this, Fed Chairman Jerome Powell’s latest statement appears to dampen hopes; Powell signals only one rate cut in 2024 as inflation still remains at the top of the 2% target range.
US PPI Inflation Drops to Lowest Level Since October 2023
The latest data from the Bureau of Labor Statistics showed U.S. PPI inflation fell 0.2% in May, following a 0.5% rise in April. This marks the largest decline since October last year. On an unadjusted basis, inflation fell to 2.2% in May, compared to 2.3% in the previous month. Additionally, the market expected annual PPI inflation to be at 2.5%.
On the other hand, there was no change in core PPI, excluding food, energy and trade services, compared to the previous month. Additionally, the annual core PPI rate fell to 2.3% in May, compared to the 2.4% figure recorded in April. The market also expected the annual Core PPI rate to be 2.4%.
Although the latest PPI inflation data in the USA indicates that inflation has started to cool down, the market seems to be taking a cautious approach as it still remains above the Fed’s target range. Although the Fed’s dot chart still points to two rate cuts this year, the Fed Chairman’s latest comment appears to have weighed on investor sentiment.
Also Read: $100 Million Inflow Reverses in Spot Bitcoin ETFs But Risks Still Visible
What’s Next for Bitcoin Price?
Bitcoin made a strong recovery following yesterday’s cooling US CPI inflation data. However, although today’s data indicate that US PPI inflation has cooled, there is increasing volatility in the market.
According to market experts, investors are looking for more clarity before investing in the sector. Moreover, the Fed Chairman’s recent hawkish signal further suppressed the market sentiment. Following the PPI inflation data, the US 10-year Treasury Bond Yield decreased by 0.49% to 4.273, while US Dollar Index Futures decreased by 0.15% to $104.475.
However, despite the cooling PPI inflation figures, Bitcoin price decreased by 2.53% to $67,750.82. Altcoins including Ethereum, solana, XRP, and dogecoin followed suit. Amid the decline in major crypto prices, the global crypto market fell 2.77% to $2.45 trillion.
Meanwhile, despite the recent decline, market experts are expecting a potential rise in Bitcoin price. Cooling inflation data despite hawkish statements suggest the Fed may take a dovish stance soon, which could trigger a rally in the broader crypto market, let alone the price of Bitcoin.
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A seasoned professional with 3 years of experience in the financial market, Rupam has honed his skills as a meticulous research analyst and insightful journalist. She enjoys exploring the dynamic nuances of the financial landscape. Currently working as a sub-editor at Coingape, Rupam’s expertise goes beyond traditional boundaries. His contributions include breaking news, examining AI-related developments, providing real-time crypto market updates, and providing insightful economic news. Rupam’s journey is marked by his passion to demystify the intricacies of finance and deliver impactful stories that will resonate with diverse audiences.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. Neither the author nor the publication accepts any liability for your personal financial loss.
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