Bitcoin, Ethereum and XRP fell Thursday after a stronger-than-forecast US producer price report pushed traders to raise the odds of a Federal Reserve rate hike at next week's meeting. Oil prices and long-dated Treasury yields also jumped, adding pressure across risk assets.
Bitcoin, Ethereum and XRP resumed their declines Thursday after new US inflation data raised expectations that the Federal Reserve would hike rates at its next meeting. Bitcoin dropped about 2.7% to $77,300. XRP fell about 3.9% to just over $1.37, and Ethereum slid roughly 2.1% to $2,450.
Producer prices come in ahead of forecasts
The Bureau of Labor Statistics' Producer Price Index rose 0.4% in August, matching economist forecasts, and climbed 5.4% on an annual basis, just above the 5.3% consensus. Core PPI ticked up 0.2% month-on-month, reversing a 0.3% drop the prior month. Despite that partial cooling, the report signaled inflationary pressures remain elevated.
Fed hike odds climb
Markets are now focused on the Federal Reserve's September 15-16 policy meeting. After the PPI release, CME FedWatch data showed traders pricing in a 74% chance of a hike to a 3.75%-4.00% range, down from 80% before the report, with a 26% chance of a smaller move to 3.50%-3.75%, up from 20%. Higher interest rates tend to weigh on crypto because they strengthen the dollar and lift Treasury yields, reducing demand for risk assets.
Oil and yields add pressure
The selloff coincided with a jump in oil prices. Brent crude traded at $106.83 a barrel Thursday afternoon, up 5.6% on the day and its highest level since May 19, following reported US strikes on Iranian oil tankers. Long-dated Treasury yields moved with it: the 10-year yield reached 4.92%, its highest since October 25, 2023, while the 30-year climbed to 5.34%, above every daily close of the past five years.
Friday's US CPI report is also on the market's radar, as it could further shift Fed expectations and drive additional selling pressure on Bitcoin, Ethereum and XRP — or ease it.
Sources: CoinGape, The Defiant
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