Crypto Market Dips as Hot PPI Data Stokes Inflation Concerns

The cryptocurrency market posted mild losses on Thursday after the latest US Producer Price Index (PPI) data came in hotter than expected, raising concerns about inflation and its potential impact on Federal Reserve policy.

In response, Bitcoin (BTC) fell by approximately 1% in the past 24 hours, trading at $96,400. Ethereum (ETH) recorded a 1.1% drop, priced at $2,650. XRP gained 0.8% to $2.48, and Solana (SOL) slid 0.5% to $195, according to CoinGecko.

The cryptocurrency market recorded a 2% decline over the past day, bringing its total market capitalization down to $3.31 trillion. Heightened volatility triggered $206 million in liquidations, according to CoinGlass. Ethereum (ETH) led with $40 million in liquidations, followed by Bitcoin (BTC) at $32 million. Altcoins contributed to around $31 million in liquidations.

Analysts suggest that the modest rise in January PPI could lead to ongoing inflationary pressures, which could influence the Federal Reserve's monetary policy decisions.

PPI Report

“The report on PPI released today confirmed a theme of inflationary pressures that the CPI had already shown to some extent yesterday,” said Quasar Elizundia, a research strategist at Pepperstone.

January's PPI rose 0.4%, exceeding the 0.2% consensus estimate, while December’s increase was revised to 0.5%. On a year-over-year basis, PPI increased 3.4%, slightly lower than December’s 3.5% rise.

“These figures add to the consumer inflation data published yesterday, which also exceeded expectations and raised concerns that the Federal Reserve might be less willing to cut interest rates in 2025,” Elizundia said.

Tariff Concerns

Elizundia noted that rising costs for essentials like energy and certain foods—especially due to increases in diesel and eggs—are a key concern.

“The new import tariffs proposed by the Trump administration add uncertainty as they could further push up the prices of inputs and final goods,” Elizundia said.

Over a week ago, President Donald Trump announced tariffs on China, Canada, and Mexico, raising concerns that inflation could remain elevated. This move could make it more difficult for the Federal Reserve to shift toward a looser monetary policy, Elizundia added.