On Wednesday, May 13, the U.S. Producer Price Index (PPI) for April rose 6% year-over-year, well above market expectations, indicating accelerating wholesale inflation. Following the data release, Bitcoin briefly fell below the $79,000 mark for the first time since May 4, hitting an intraday low of $78,704.
According to Coinglass data, the sharp sell-off resulted in over $304 million in long positions being liquidated across the cryptocurrency market. Bitcoin alone saw $94 million in long liquidations, up $37 million from the previous day. Short liquidations also doubled to around $7.1 million. Bitcoin's 24-hour decline was nearly 1%, and its market capitalization dipped below $1.6 trillion.
Macro Headwinds and Geopolitical Tensions
The PPI shock comes a day after the Consumer Price Index (CPI) showed inflation remaining stubborn, raising fears that the Federal Reserve may need to maintain or even tighten monetary policy. An analyst from Bitunix noted that the surge in energy prices is again becoming the dominant factor within U.S. inflation, with pressures now spreading to housing, services, and broader consumption. “The data suggests that despite two years of monetary tightening, U.S. inflation has not genuinely returned to a stable trajectory,” the analyst said.
Meanwhile, geopolitical risks in the Middle East added to market uncertainty. President Trump described U.S.-Iran relations as being on a “life-support device” after rejecting Iran’s peace overtures. Markets are now watching Washington’s next steps closely, weighing on risk assets like Bitcoin.
Interest Rate Outlook: 6% PPI Fuels Rate Hike Bets
The hot PPI reading pushed up expectations for another rate hike. Prediction markets Polymarket and Kalshi priced in a near 100% probability of a rate hold at the Fed’s June meeting, but some officials signaled the need for further tightening. Boston Fed President Susan Collins warned that some degree of “monetary tightening” is required to ensure inflation returns sustainably to the 2% target. For risk assets like tech stocks and Bitcoin, additional tightening would limit upside potential.
As of press time, Bitcoin had recovered slightly above $79,000 but remained under pressure. Analysts suggest that if upcoming macro data continues to show strength, Bitcoin could retest the $75,000 support level.