Markets
US PPI Inflation Drops to 2.2%, Bitcoin Price Rise Imminent?
The latest US Producer Price Index (PPI) data showed that inflation cooled to -0.2% in May, while the market had expected a 0.1% rise. Namely, the cooling of inflation data fueled optimism in the market regarding a potential peaceful stance by the Federal Reserve.
Furthermore, the latest US CPI data also boosted market confidence. Despite this, Fed Chairman Jerome Powell’s latest remark appears to dampen hope as it only signals a rate cut in 2024 as inflation still remains at the top end of the 2% target.
US PPI inflation falls to lowest level since October 2023
The latest data from the Bureau of Labor Statistics showed that the US PPI Inflation
fell 0.2% in May, after rising 0.5% in April. Notably, this marks the biggest drop since October last year. On an unadjusted basis, inflation cooled to 2.2% in May, compared to 2.3% in the previous month. Furthermore, the market expected annual growth PPI inflation reach 2.5%.
On the other hand, the IPP Core, excluding food, energy and commercial services, remains unchanged compared to the previous month. Furthermore, the base annual PPI rate in May decreased to 2.3%, compared to the 2.4% value observed in April. The market also expected the annual Core PPI rate to reach 2.4%.
While the latest US PPI inflation data indicates that the inflation is cooling, it appears the market is taking a cautious approach as it still remains above the Fed’s target range. Although the Fed’s dot plot still indicates two rate cuts this year, the Chairman’s recent comment of the Fed appears to have weighed on investor sentiment.
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What’s Next for Bitcoin Price?
Bitcoin noticed a strong recovery after yesterday’s cooldown US CPI inflation data. However, despite today’s data signaling that US PPI inflation has also cooled, the market faces increased volatility.
According to market experts, investors are looking for more clarity before betting on the sector. Furthermore, the recent hawkish signal from Fed Chairman weighed even more on market sentiment. Notably, following PPI inflation data, the US 10-year bond yield decreased 0.49% to 4.273, while US Dollar Index futures fell 0.15% to $104.475.
However, despite the cooling of PPI inflation numbers, Bitcoin price fell 2.53% to US$67,750.82. Altcoins including Ethereum, Solana, XRP, and Dogecoin also followed suit. Amid falling major cryptocurrency prices, the global cryptocurrency market fell 2.77% to $2.45 trillion.
Meanwhile, despite the recent decline, market experts anticipate a potential recovery in Bitcoin’s price. Despite the hawkish comments, cooling inflation data signals that the Fed may soon take a dovish stance, which could drive a recovery in the broader crypto market, let alone the price of Bitcoin.
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