Bitcoin briefly fell below $79,000 for the first time since May 4 after Wednesday's U.S. Producer Price Index (PPI) data showed a sharp acceleration in wholesale inflation.The broader crypto market faced $304 million in long liquidations, with Bitcoin longs accounting for approximately $94 million.
PPI Data Exceeds Expectations, Sparking Market Panic
The U.S. Department of Labor reported that April 2026 PPI surged 1.4% month-over-month, pushing the year-over-year rate to 6%, well above consensus estimates. This followed the earlier release of CPI at 3.8%, which also slightly beat forecasts. Analysts noted that surging energy prices have once again become the dominant factor within U.S. inflation, now spreading into housing, services, and broader consumer categories.
Bitcoin had peaked at $82,145 on May 11 before declining steadily. On Wednesday, it momentarily plunged to $78,704. As of press time, it recovered slightly to trade above $79,000, still down about 1% over 24 hours, with its market cap falling below $1.6 trillion. The sell-off began after the Trump administration rejected a counterproposal to Iran's peace offer, exacerbating geopolitical tensions in the Middle East and dampening risk appetite.
Fed Rate Hike Expectations Rise, Risk Assets Under Pressure
Following the PPI release, prediction markets Polymarket and Kalshi indicated a near-100% probability of a Fed rate hike in June. Boston Fed President Susan Collins warned that further "monetary tightening" is needed to ensure inflation sustainably returns to 2%. For risk-on assets like tech stocks and Bitcoin, additional tightening is seen as a cap on upside potential.
Data from Coinglass showed that the crypto market saw $304 million in long liquidations versus $71 million in short liquidations during the sell-off. Bitcoin long liquidations alone reached $94 million, up $37 million from the previous day. Short liquidations also doubled from Wednesday's $7.5 million. While overall leverage in the market has declined, short-term volatility risks remain elevated.
Can Bitcoin Hold $78K Under Macro and Geopolitical Pressure?
Bitcoin has now dropped over $3,000 from its recent high, and market sentiment has turned cautious. If CPI and PPI remain elevated, the Fed's rate hike path will become clearer, potentially driving further capital outflows from risk assets. Meanwhile, uncertainty around U.S.-Iran negotiations could escalate into conflict, triggering another wave of risk-off selling. Some analysts believe that if geopolitical tensions ease and inflation shows signs of peaking, Bitcoin could stabilize in the $75,000-$80,000 range.
Traders are watching upcoming U.S. retail sales data and Fed speakers for clues on near-term rate direction. In the highly leveraged crypto market, any surprise data could spark sharp price swings.