Bitcoin (BTC) falls below $77000, strong PPI data triggers interest rate hikes

Core Points

The digital asset market has generally weakened, and monetary policy concerns have suppressed the performance of ETFs and traditional markets.

Bitcoin fell below the US$77,000 mark, inflation data triggered rising expectations of interest rate hikes

Bitcoin prices fell by about 2% after the unexpectedly strong U.S. producer price index (PPI) data was released, falling below the US$77,000 integer mark. Data showed that producer prices rose 5.4% year-on-year, raising the probability of the Federal Reserve raising interest rates at its mid-September policy meeting to 74%.

Among the major cryptocurrencies, Zcash (one of the representatives of the Monero class) fell the most, plunging 12%;XRP fell by about 4%; and Solana fell below the psychological barrier of $100.

Meanwhile, U.S. spot bitcoin exchange-traded funds (ETFs) recorded a net outflow of $120 million on Wednesday, more than twice the size of the previous day. The Standard & Poor's 500 index fell to about 7,594 points, closing down for four consecutive trading days, continuing its recent weakness.

Bitcoin Price Dynamics and Technical Analysis

Bitcoin fell nearly 2% in 24 hours, falling below the US$77,000 mark. This trend stems from the latest release of U.S. inflation indicators showing that producer prices have grown faster than analysts 'expectations. The economic data prompted market participants to significantly increase their expectations for the Federal Reserve to implement an imminent interest rate hike.

According to the U.S. Bureau of Labor Statistics, the producer price index (PPI) rose 5.4% year-on-year, slightly above the market consensus forecast of 5.3%. On a month-on-month basis, producer prices rose 0.4%, fully in line with expectations. Core PPI rose 0.2% month-on-month, reversing the previous contraction of 0.3%.

After the release of inflation data, the CME FedWatch tool showed that the market gave the Fed a 74% probability of raising interest rates during the Federal Open Market Committee meeting from September 15 to 16, and the market expected target interest rate range will be adjusted to 3.75% to 4.00%.

As of press time, Bitcoin is trading at approximately US$77,300. Bitget analysts pointed out that $76,270 is a key technical support level, and Bitcoin is currently trading at less than $800 above this key level.

Digital asset markets are generally under pressure

The CoinDesk 20 index pulled back by about 3%, a decline almost twice that of Bitcoin. Among the tokens covered by the CoinDesk 100 Index, the vast majority-as many as 95-ended the day's trading with negative returns.

Among the major digital assets, Zcash became the biggest loser, plunging about 12% to about $1,134. Although it has experienced a strong rebound recently, the decline has narrowed its weekly gain to about 34%, and the cumulative gain over the past 30 days has also been close to 145%.

Hyperliquid's HYPE token fell about 7% to below $79, widening its weekly decline to about 10%. Dogecoin fell about 6% to 8 cents. XRP fell about 3% to $1.34, a cumulative decline in seven days of nearly 7%. Solana fell more than 3%, falling below the important psychological threshold of $100.

In contrast, Ether showed some resilience, falling slightly less than 2%, trading at about $2,445. Tron (wavefield) performed outstandingly, being the only major cryptocurrency to remain stable, with its price unchanged at 34 cents and achieving a weekly gain of more than 3%.

Monetary policy concerns impact ETFs and traditional financial markets

The U.S. spot Bitcoin ETF recorded a net outflow of US$120 million on Wednesday, more than double the size of the previous day. Meanwhile, investment products linked to Ether, XRP and Solana attracted inflows on the same day.

Previously, on September 10 (U.S. Eastern Time), the Bitcoin Spot ETF recorded a total net outflow of US$283 million, marking three consecutive days of net redemption. The situation of Ethereum spot ETFs is also worthy of attention.

The S & P 500 closed down at about 7,594 points, setting a record for the fourth consecutive trading day of decline. Asian stock futures also showed weakness: Nikkei stock index futures fell nearly 2%, South Korean futures fell more than 3%, and Hong Kong contracts fell nearly 1%.

U.S. 30-year Treasury yields hit a 19-year high. The yield on the benchmark 10-year Treasury note approached the 5% mark, while the yield on the 2-year Treasury note climbed above 4.5%.

Brent crude oil futures surged above US$107 a barrel, or more than 6%, further exacerbating market concerns about the overall inflation trajectory.

Market focus shifts to upcoming CPI data

For now, attention has turned to Friday's Consumer Price Index (CPI) release at 8:30 am (EST). Economists expect headline inflation to be 3.4 percent year-on-year and core inflation to be 2.4 percent. The upcoming data may further amplify or ease pressure on cryptocurrencies and stock markets before the Fed makes policy decisions.