US PPI hits three-year high and hits expectations of interest rate cuts, and crypto market plummets in the short term

Jessy, bitchain vision

On the evening of August 14, Beijing time, after the United States released PPI data, the crypto market ushered in a rapid decline.

Data shows that the US PPI data in July soared to 0.9% month-on-month, hitting a three-year high to 3.3% year-on-year.As soon as the news came out, the crypto market plummeted after the news was released:

According to OKX market, Bitcoin fell from its high of about $124,500 yesterday, and fell to about $117,156 in the early morning of the 15th, and Ethereum fell from its high of $4,790 yesterday to $4,451 in the early morning of the 15th.

Previously, the CPI released on Tuesday was slightly lower than expected, once pushing up market expectations that the Federal Reserve may cut interest rates in September, and even had a 50bp expectation.However, after the PPI upset data was released, the 50bp rate cut was basically withdrawn from the market forecast. According to CME’s “Federal Observation”, the probability of a 25bp rate cut also dropped from close to certainty to about 92.1%.

After the short-term price decline, the crypto market recovered and recovered today, but subsequent macro uncertainty is still there.

PPI soars in surprise, probability of interest rate cuts in September declines

PPI (Producer Price Index) measures the average price change of goods and services sold by domestic producers. It belongs to the upstream price indicator and reflects inflation pressure before the CPI (Consumer Price Index).If PPI continues to rise, production costs will increase, which will usually be transmitted to consumer prices in a few months.

The PPI rose significantly more than expected this time. In-depth analysis found that service PPI rose by 1.1% month-on-month, the largest since March 2022; especially the profit margin of machinery and equipment wholesalers jumped by 2%, which is an important force driving PPI.Regarding the cost of imported goods, some analysts pointed out that although companies have absorbed a large amount of tariff costs before, these costs are currently “gradually transmitted” to the manufacturing end and consumers, and inflation is expected to rebound moderately in the second half of the year.

“Although businesses have so far taken most of the burden of rising tariff costs, rising costs of imported goods are increasingly compressing profit margins,” said Ben Ayers, a senior economist at Nationwide, in a note.”We expect tariff costs to be transmitted more significantly to consumer prices in the next few months, and inflation may rise moderately in the second half of 2025.” The report shows that although demand slowed down in the first half of this year, companies are still adjusting their pricing of goods and services to help offset the cost pressure brought by rising U.S. tariffs.

The surge in PPI means that the originally suppressed inflation factors are being released, especially the rising prices in manufacturing and services, which may be a precursor to accelerating the recovery of CPI.Previously, the decline in CPI made the market optimistic, but the strong rebound of PPI shows that cost pressure on the production side is still accumulating.Before the announcement of PPI, the market generally expected a 25-50 basis point interest rate cut in September, with a probability of nearly 100%.After the data was released, the probability of a 25 basis point cut rate cut fell to about 92%, while the possibility of a 50 basis point was almost wiped out by the market.

Crypto short-term repair, but uncertainty remains

Although the market fell in the short term on the evening of August 14, as of the daytime on August 15, Beijing time, both Bitcoin and Ethereum had rebounded slightly.For investors who are optimistic about the future market, last night may have been a good time to buy at the bottom.

However, the “upset” of PPI this time is actually a reminder of the market that inflation has not been completely controlled and interest rate cuts are not a foregone conclusion.

In the short term, the recovery of the market comes more from the rebound after the technical oversold and some investors buying at low prices, but the macro side is still full of uncertainty.The Fed’s policy orientation in September will be highly dependent on key data such as inflation and employment in the next few weeks. If the inflation data continues to be strong, the amplitude and pace of interest rate cuts may be lower than previous expectations, and the time point for market liquidity improvement will also be delayed.

For the crypto market, fluctuations in macro liquidity and risk appetite often amplify the price fluctuation range.When positive expectations dominate, core assets such as Bitcoin and Ethereum are expected to hit the key resistance above; but if data continues to suppress loose expectations, the market may face pressure to pull back again.

From now until the Fed’s interest rate settlement in September, there are three main key data that decide whether to cut interest rates. One is inflation-related data, CPI, PPI and PCE price index, especially core PCE, which is the inflation measurement indicator that the Fed is most concerned about.One is the employment market data, non-agricultural employment reports and the number of unemployment claims, which reflect economic resilience and employment trends.One is macro activities and consumption signals,Leading indicators such as retail sales, ISM manufacturing and service industry PMI.

These data will be released from the end of August to mid-September. After these data are released in turn, the Federal Reserve will hold the latest round of interest rate meetings from September 16 to 17, 2025, at which time its interest rate decision will be released.

In this context, both encryption and U.S. stocks are highly sensitive to macro data.For investors, it is necessary to grasp the rhythm and avoid unilateral betting on the policy direction.

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