Bitcoin Dips as US PPI Overshoot Fuels Inflation Concerns

Bitcoin (BTC) fell below $77,000 during Thursday's Wall Street opening, as risk assets reacted to renewed macroeconomic pressures following a US PPI overshoot. August's data for the US Producer Price Index exceeded expectations, contributing to the downturn.

The US PPI for August registered a 5.4% year-over-year increase, surpassing forecasts by 0.1%. The July PPI figure was also revised upwards. This data, alongside escalating tensions in the Middle East and rising oil prices, fueled inflation concerns.

Simultaneously, escalating tensions in the Middle East contributed to a surge in oil prices. West Texas Intermediate (WTI) crude surpassed $100 per barrel for the first time since May 21, while Brent crude exceeded $105 per barrel, nearing a 16-week high. This increase in oil prices further fueled inflation concerns.

Long-dated US bond yields also saw a significant rise, despite the Treasury's $6 billion debt buyback operation on Wednesday. The US 30-year yield reached 5.353%, a level not observed since June 2007, and the 10-year yield hit 4.924%, its highest point since November 2023. Trading resource The Kobeissi Letter highlighted potential negative effects from these elevated borrowing costs on both government and consumer sectors.

Market expectations for interest rate hikes by the Federal Reserve intensified following the US PPI overshoot. CME Group’s FedWatch Tool indicated a 69.8% probability of a 0.25% rate hike at the Fed's September 16 meeting, up from 61.2% the previous day. This comes after earlier concerns about Fed policy tightening due to strong nonfarm payrolls data.

The Consumer Price Index (CPI) report, another key inflation indicator, is scheduled for release on Friday, preceding the Fed's rate decision. Separately, the European Central Bank implemented its own 0.25% rate hike on Thursday, marking its second such increase in 2026.