Hot PPI Print at 3% Triggers Bitcoin Drop as Inflation Fears Return

U.S. PPI hit 3% in December, above forecasts, sending Bitcoin below $83,000 as traders reassess rate cuts. outlook dims now.

Bitcoin prices declined after U.S. producer inflation data exceeded market expectations.

The higher reading reinforced concerns that inflation remains persistent, while traders reassessed the outlook for interest rate cuts.

Digital asset markets reacted quickly as macroeconomic pressure returned to focus.

U.S. Producer Inflation Exceeds Market Expectations

Data from the Bureau of Labor Statistics showed producer prices rose 3% year-over-year in December. This reading exceeded forecasts of 2.7%.

On a monthly basis, the Producer Price Index increased by 0.5%, also above the expected 0.2%.

Core PPI, which excludes food and energy, rose 3.3% year-over-year. That figure was higher than the 2.9% estimate, although lower than November’s 3.5% reading.

Monthly core PPI increased by 0.7%, well above expectations of 0.2%.

The data signaled that pricing pressure at the producer level remains elevated.

Market participants viewed the report as confirmation that inflation progress remains uneven. Attention shifted to how the Federal Reserve may respond.

Bitcoin Slips Below $83,000 After Data Release

Bitcoin moved lower following the release of the PPI figures. The asset traded near $82,000 at press time after briefly touching $83,000 earlier in the session.

Price weakness followed the inflation report and broader market reaction.

The cryptocurrency fell more than 2% on the day and dropped to around $81,000 at its lowest point.

This move marked a new yearly low. Trading data showed increased volatility following the economic release.

Earlier gains linked to political developments faded as macro data took precedence.

Investors appeared to reduce exposure amid uncertainty around future monetary policy. The inflation report added pressure across risk assets.

Federal Reserve Signals Caution on Rate Policy

The hot PPI reading came days after the Federal Reserve held interest rates steady. Officials cited concerns that inflation remains above the 2% target. Fed Chair Jerome Powell said inflation trends still require close monitoring.

Powell also noted that tariff-related inflation could peak around mid-2026. The Federal Open Market Committee signaled no urgency for further rate cuts.

Officials pointed to a stabilizing labor market as justification for patience.

Recent inflation data supports a wait-and-see stance. November’s Personal Consumption Expenditures inflation came in at 2.8%.

That figure also exceeded the Fed’s target, reinforcing caution among policymakers.

Waller Argues Inflation Should Not Delay Cuts

Fed Governor Chris Waller presented a different view following the PPI release. He said inflation remains elevated due to tariffs, but expectations remain anchored.

According to Waller, policy should look beyond temporary effects.

Waller stated that inflation excluding tariff effects is close to the Fed’s target. Waller added that inflation is on a sustainable path. He also argued that the labor market shows signs of weakness.

He pointed to rising unemployment and weak payroll growth in 2025. Payrolls increased by under 600,000 jobs last year.

“This does not remotely look like a healthy labor market,” Waller said.

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