Cryptocurrencies continue to struggle after Thursday’s producer price inflation data release, which may have derailed crypto’s near-term prospects.
What Happened: Prominent analyst Benjamin Cowen attributes the crypto selloff to a sharp rise in producer price index (PPI) inflation, which jumped from 2.3% to 3.3% year-over-year, well above expectations.
Bitcoin (CRYPTO: BTC) prices broke below $119,000, while XRP (CRYPTO: XRP) also lost ground heading to around $3.1.
He explains that PPI reflects upstream, wholesale inflation, while consumer price index (CPI) shows downstream, retail costs.
Despite the PPI surge, CPI remained stable (rising only from 2.67% to 2.73%), suggesting companies may be absorbing costs rather than passing them to consumers.
He emphasizes the tension between expectations of strong economic conditions and accommodative Fed policy, arguing that rate cuts typically signal economic weakness.
The morning selloff coincided with the PPI release, but Cowen expects the market to attempt recovery until clearer inflation trends emerge.
Also Read: Bitcoin, Ethereum, XRP, Dogecoin Extend Pullback But Traders Call It ‘Just A Breather’
What's Next: Cowen notes that September rate cut odds remain high (~90%) but down from the earlier 97% to 98% range. He warns that if CPI starts rising, markets could react negatively, similar to last year when rate cuts coincided with rising long-term yields.
He links this to his seasonal framework, predicting a likely crypto rally through August followed by a potential September pullback driven by macro factors like inflation or unemployment.
Next month's CPI reading will be the key indicator for whether inflation pressures are persisting and could drive corrections toward technical supports like Bitcoin's 20-week simple moving average.
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