Bitcoin and XRP fell further on Thursday as hotter-than-expected US PPI inflation data reinforced concerns over Fed rate hikes. The data followed a hotter-than-expected CPI inflation print a day before. Stock and crypto market investors now await comments from Fed Chair Kevin Warsh later today.
The US Bureau of Labor Statistics released the September PPI inflation data on October 15. The PPI MoM jumped 1.3% in September on a seasonally adjusted basis, above the 0.6% forecast. This marked the largest monthly rise since March 2022.
Annual PPI inflation came in at 6.3%, massively higher than expected at 5.4%. It even surpassed 5.6% in the prior month. This comes amid elevated oil prices due to a renewed US-Iran war and escalating Middle East tensions.
The core PPI reading came in hotter than expected at 0.7% MoM, pushing the annual increase to 5%. Core PPI YoY surged to 4.4%, above expectations and even the previous month’s 4.8%.
The print builds on Wednesday’s hotter CPI inflation data of 3.7% YoY, which already lifted near-term Fed rate hike odds. Markets are now pricing in 34% odds of a 25 bps rate hike in October and 66% chances of a pause, according to CME FedWatch data.
Moreover, retail sales in the US increased 0.8% MoM, after an upwardly revised 1.3% rise in August and well above forecasts of 0.3%. This shows resilience in the US economy and opens room for another potential Fed rate hike this month.
For anyone not keeping track, US CPI inflation is now nearly double the Fed's 2% target and US PPI Inflation is more than triple that target.
PPI inflation was expected to fall in August, but instead it surged to 6.3%, its second highest level in…
Bitcoin fell near $81,500, extending the 24-hour drop to more than 3.60% after the hot PPI inflation print. It has now tumbled even below the key 50-day moving average support level. The 24-hour low was $80,443 as the broader crypto market faced pressure from elevated rate expectations.
XRP price fell deeper and holds near $1.30, down more than 5% over the past 24 hours. As CoinGape reported today, a popular analyst predicted a fall towards $1.25 before buying pressure to reclaim $1.42 and $1.60 amid strong upside momentum.
However, the 10-year Treasury yield has dropped to 5.06% as investors rotate from tech stocks to government bonds for safety amid sustained AI investments. Meanwhile, the US dollar index (DXY) pulled back from its peak to around 102.10 on Thursday.
Attention now turns to Fed Chair Kevin Warsh’s fireside chat with IMF Managing Director Kristalina Georgieva later today. Any hawkish lean on inflation or Fed monetary policy could further pressure Bitcoin, stocks, and other risk assets. A more measured tone might offer temporary relief.
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