US PPI Hits Highest Monthly Rise Since 2022

The crypto market has just suffered one of its most significant setbacks of the year. In a few hours, bitcoin lost over $5,000, causing a widespread rout among other assets. Indeed, the release of a US Producer Price Index (PPI) well beyond expectations rekindles the specter of persistent inflation. This statistic, which surprises both Wall Street and the crypto ecosystem, upends monetary policy expectations and triggers a cascade of liquidations on leveraged positions, increasing downward pressure.

US Producer Inflation Takes Everyone by Surprise

While bitcoin crossed the $124,000 mark, Thursday’s session was dominated by an unexpected figure : the US PPI rose by 0.9 % in July compared to the previous month, and by 3.3 % year-on-year, its fastest pace since February.

According to official data, “economists expected an annual rise of around 2.5 %”, revealing the magnitude of the surprise. It is also the largest monthly increase since 2022.

This result sharply contrasts with the Consumer Price Index (CPI) published a few days earlier, which showed inflation at 2.7 % year-on-year, considered compatible with an upcoming interest rate cut.

Here are the key facts to remember :

• US PPI in July : +0.9 % monthly and +3.3 % yearly (largest monthly increase since 2022) ;
• Economists’ forecasts : +2.5 % annually, making the surprise particularly marked ;
• CPI published earlier in the week : +2.7 % annually, initially fueling optimism about rate cuts ;
• Impact on monetary expectations : the probability of a 0.25 % Fed rate cut in September dropped from 99.8 % to 90.5 %.

For the markets, this decline in expectations reflects the possibility that the Federal Reserve may choose to delay amid inflationary pressures still rooted in the production chain. Bitcoin, which had just reached a historic high at $124,000, quickly dropped to $117,400, dragging down all major cryptos in its fall.

The Leveraged Market Caught in the Turmoil

The impact of the inflation shock goes beyond spot prices. The derivatives market experienced a real blast. According to CoinGlass data, “over one billion dollars in crypto positions were liquidated in 24 hours, including about $782 million in long positions”.

The largest individual liquidation concerned an ETH/USDT position of $6.25 million on Bybit. This wave of liquidations was amplified by an extreme leverage environment: the total open interest on altcoins reached a record $47 billion.

This setup increased volatility, turning a technical correction into a massive sell-off. From a charting perspective, a double top formation on bitcoin was noted, a pattern previously observed in January that preceded a major correction. In the short term, the $112,000 level stands as a crucial support. Above it, a consolidation scenario could take hold. Below, the risk of a return to $105,000 – $110,000 would increase significantly.

Thursday’s session illustrates the persistent vulnerability of the crypto market to macroeconomic shocks. While the long-term bullish trend of bitcoin is not challenged by this temporary dip, the episode reminds us that no rally is linear. The combination of a market saturated with leverage and a busy macroeconomic agenda promises to keep volatility at a high level in the coming weeks.