Crypto Market Dips as Fed Remarks Spark Volatility

The cryptocurrency market recorded volatility on Thursday, following the release of U.S. inflation data and remarks from Federal Reserve Chair Jerome Powell, which fueled uncertainty around interest rates.

Bitcoin (BTC) held steady near $103,500 while Ethereum (ETH) decreased 1.2% over the past 24 hours to $2,560. Meanwhile, Solana (SOL) recorded a larger decrease of 3% to $171 as XRP dropped around 4% to $2.46, according to CoinGecko.

The total cryptocurrency market capitalization decreased by 3% on the day to approximately $3.43 trillion, while leveraged liquidations amounted to $411 million, per CoinGlass. For the third consecutive day, ETH led the liquidations with $102 million. This was followed by altcoins with $80.5 million. Meanwhile, BTC saw approximately $61 million in liquidations.

Spot BTC exchange-traded funds (ETFs) recorded nearly $320 million in inflows on May 14. Meanwhile, spot Ethereum ETFs attracted over $63 million in inflows, according to SoSoValue data.

Wholesale Inflation Cools

The volatility followed softer-than-expected PPI data, as U.S. producer prices unexpectedly fell 0.5% in April – the largest monthly decline since October. The drop came after no growth in March and defied forecasts for a 0.2% increase, according to a Bloomberg survey.

Earlier this week, the Consumer Price Index report also came in softer-than-expected. Together, the PPI and CPI numbers signal cooling U.S. inflation. However, Fed Chair Jerome Powell cautioned today that investors might see higher long-term interest rates as economic policies continue to shift.

“We may be entering a period of more frequent, and potentially more persistent, supply shocks – a difficult challenge for the economy and for central banks,” Powell said at a conference.

Illiquid Moves

Meanwhile, Dr. Kirill Kretov at CoinPanel noted that “we are in a highly volatile market where, despite the overall bullish sentiment, thin liquidity continues to amplify price movements.”

“Even relatively small trading volumes can drive significant price changes,” he explained, noting that this also explains why higher market capitalization coins like BTC and ETH are less affected, while lower liquidity assets are recording more pronounced swings.

“In the current environment, price moves of up to 10% are well within normal volatility, and anything below 5% can often be considered just market noise,” Dr. Kirill explained. “Some of this movement likely comes from profit-taking, as traders secure gains after the recent rally – and with liquidity so thin, even modest sell-offs can quickly translate into noticeable corrections.”