Bitcoin briefly slipped below $79,000 on Wednesday for the first time since May 4, as investors digested the latest Producer Price Index (PPI) data showing a sharp acceleration in wholesale inflation. According to the daily price chart, bitcoin dropped from above $81,000 to an intraday low of $78,704.
At the time of writing (1:08 p.m. EDT on May 13), the cryptocurrency had recovered to just above $79,000 but remained down 1% over 24 hours, with market capitalization falling below $1.6 trillion. Since its May 11 peak of $82,145, bitcoin has lost approximately $3,000.
PPI Surge Stuns Markets, Rate Hike Odds Rise
Data from the U.S. Department of Labor showed April PPI surged 1.4% month-over-month to an annual rate of 6%, far exceeding expectations. This followed Tuesday's Consumer Price Index (CPI) release, which also came in above forecasts. A Bitunix analyst noted that the latest CPI data indicates “energy-driven price shocks are once again becoming the dominant force within the U.S. inflation structure, with pressure now spreading into housing, services, and broader consumer sectors.” The analyst added, “The data suggests that despite two years of restrictive monetary policy, inflation in the United States has not truly returned to a stable trajectory.”
The PPI spike has dampened hopes for rate cuts and increased the probability of a rate hike. On prediction markets Polymarket and Kalshi, the odds of the Federal Reserve leaving interest rates unchanged in June were near 100%. Boston Fed President Susan Collins reportedly warned that “some policy tightening is needed to ensure that inflation returns durably to 2% in a timely manner.”
$304M in Longs Liquidated
Similar to Tuesday, bitcoin's slide resulted in long liquidations far surpassing short liquidations. Coinglass data shows $94 million in BTC long positions were liquidated, up from $57 million the prior day. Short liquidations totaled $15 million, double Tuesday's $7.5 million. Across the broader crypto market, a total of $304 million in long positions were liquidated versus $71 million in shorts.
Geopolitical and Macro Headwinds
The decline from bitcoin's May 11 high was partly triggered by the Trump administration rejecting an Iranian counter-peace proposal, and President Donald Trump describing U.S.-Iran relations as being on “life support.” Global markets await Washington's next move, while the inflation data has further weighed on risk assets. For tech stocks and bitcoin, additional tightening is viewed as a cap on upside potential.
At press time, bitcoin was trading around the $79,000 level, with markets closely watching Fed policy signals and geopolitical developments.