Crypto Markets Bounce as Data Shows Cooling U.S. Wholesale Inflation

The cryptocurrency market is rebounding following recent sharp losses, buoyed by the latest Producer Price Index (PPI) report.

Bitcoin (BTC) surged to over $96,700, a 5.2% increase from the previous day. Ethereum (ETH) rose 7% to $3,225. XRP climbed 10% to $2.68, while Solana (SOL) reached $187, a 6% increase. The overall cryptocurrency market capitalization increased by 4.4% to $3.51 trillion, according to CoinGecko.

In the past 24 hours, 89,529 traders were liquidated, with total liquidations coming in at $308 million, according to CoinGlass. ETH and BTC both accounted for around $75 million in liquidations, while altcoins recorded $34 million in liquidations.

December PPI

This market recovery follows the release of the December producer price index (PPI) report, which showed a 0.2% rise, lower than the forecasted 0.4%. The annual rate increased to 3.3%, with the core PPI remaining unchanged, below the expected 0.2% increase. These figures suggest a moderation in wholesale inflation, positively influencing investor sentiment.

“This cooler inflation read drove treasury yields lower and bolstered the stock market this morning,” said Marcus Sturdivant Sr., a former financial advisor at Tristate Financial Advisors.

He noted that while he still expects a rocky path, he sees some reasons for optimism today and in the next few trading days. “If the [upcoming] consumer price index (CPI) report shows that the price saving for producers was passed to consumers tomorrow, that could be a catalyst to keep the market going,” he said.

Rough Week for Markets

Today's mild rebound follows a week of losses that began last Tuesday, triggered by strong macroeconomic data that dashed investors’ hopes for imminent rate cuts.

Experts specifically attributed the market decline to stronger-than-expected economic data such as initial jobless claims and labor force participation rates. This data raised concerns that interest rates might remain elevated for longer than anticipated.

“There appears to be a great deal of fear in the market that we may not see another rate cut at all in 2025, especially with an incredibly strong jobs report coming out on Friday,” Chris Chung, CEO and founder of Titan, told The Defiant yesterday. ”But we also had a big run-up in December, so it’s not unusual for the market to reset after such a big pump.”