Bitcoin and altcoin prices could benefit from cooling inflation, US PPI for July exceeds expectations
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- US PPI for July 2023 grows by 0.8% YoY, exceeding the expectations of market participants.
- Bitcoin price continued to range below the $30,000 level, after wiping CPI gains.
- Risk assets are likely to see an increase in volatility and a rally in prices as numbers suggest inflation is cooling off.
The US Producer Price Index (PPI) measures the cost of goods from the producers' perspective. This implies that higher PPI numbers signify higher inflation, which could lead to interest rate hikes.
Bitcoin price ranges below $30,000 in response to US PPI data release
Risk assets like Bitcoin typically see a spike in demand from investors in response to rising inflation. In general, inflation tends to devalue a currency in the long term, and applying the same here, it acts as a bullish catalyst for Bitcoin and altcoin prices.
Moreover, it's important to note that the price impact and magnitude of the rally in risk assets also depends on other economic indicators and catalysts in the ecosystem.
The US PPI inflation rate was expected to rise from 0.1% to 0.7% YoY in July, but it exceeded market expectations by a slim margin coming at 0.8%. This number is likely to convince the US Federal Reserve that inflation is under control and there is no necessity for future interest rate hikes.
The PPI data reveals costs are cooling mainly in line with market expectations and Bitcoin has shown bullishness around the numbers. If the US Federal Reserve has less need for aggressive interest rate hikes, it is a bullish sign for BTC holders and traders. Just as higher interest rates are known to bring BTC price rallies to a grinding halt, the opposite is true.
Bitcoin price could make a comeback above the $30,000 level in the week following the release, in the presence of other catalysts in the markets.
