U.S. PPI Sees Largest Increase in Three Years: Easing of Rate Cut Expectations and Over $1 Billion Liquidated in Cryptocurrency Market

U.S. Producer Price Index Surges in July

The U.S. Bureau of Labor Statistics data shows that the year-over-year Producer Price Index (PPI) for July jumped from the previous value of 2.3% to 3.3%, surpassing the expected 2.5%, marking the highest level since February of this year. The month-over-month increase reached 0.9%, significantly exceeding the expected 0.2%, and setting a new record for the largest increase since June 2022. The core PPI, which excludes food and energy, also saw its year-over-year growth rate rise to 3.7%, with a month-over-month increase of 0.9%, both hitting multi-year highs.

The rising costs of services emerged as the primary driver, with wholesale and retail profit margins increasing by 2%. Energy prices accelerated alongside rising oil prices. Following the release of this data, the three major U.S. stock index futures quickly declined, while the U.S. Dollar Index rose and gold prices fell. The market promptly adjusted its expectations for a rate cut in September, indicating that high inflation pressures have led to greater divergence of opinions within the Fed regarding policy shifts.

Impact on Cryptocurrency Market

In the cryptocurrency market, Bitcoin (BTC) was hit hard by the PPI data, falling from an all-time high of over $124,000 to about $117,000, while Ethereum retraced to $4,450. Analysts generally believe that this round of adjustment is a normal profit-taking phase following the upward trend. David Siemer, CEO of Wave Digital Assets, pointed out that Bitcoin remains a core asset in institutional portfolios, and this decline represents a recalibration of the market’s overly optimistic outlook rather than a trend reversal. Joel Kruger, a strategist at LMAX Group, also stated that the strong performance of the cryptocurrency market this week makes short-term profit-taking unsurprising, and subsequent pullbacks are expected to find support.

However, market volatility has taken a heavy toll on high-leverage traders. According to CoinGlass data, over the past 24 hours, the total liquidation of leveraged positions across the network exceeded $1 billion, with most of these being bullish positions, marking the largest single-day liquidation of long positions since the market pullback from late July to early August.

Market Outlook

Looking ahead, analysts remind investors to pay attention to upcoming U.S. inflation and employment data, as well as the impact of geopolitical risks on market sentiment. Although the mid-to-long-term trajectory of Bitcoin and mainstream cryptocurrencies is still viewed as optimistic, if valuations extend excessively or Fed policy expectations are revised again, short-term volatility may intensify.