Bitcoin dips to $77.1k as PPI data boosts Fed rate hike bets, oil prices jump

Bitcoin experienced a dip to $77,189.8 on Thursday, influenced by heightened oil prices and mixed U.S. producer inflation data, which increased expectations of Federal Reserve rate hikes and surged Treasury yields. Investors focused on the August U.S. producer price index (PPI) report, which showed a slight increase of 0.4% month-over-month and 5.4% year-over-year in headline PPI, surpassing expectations of 0.4% and 5.3%, respectively.

The revised July figures were adjusted upward to 0.1% month-over-month and 4.8% year-over-year. The core PPI rose 0.2% month-over-month and 4.6% year-over-year, aligning with market predictions. This report, issued a day before the consumer price index (CPI), highlighted a sturdy U.S. labor market and inflationary pressures, prompting the Federal Open Market Committee (FOMC) to potentially tighten monetary policy.

As a result, the probability of a quarter-point rate increase by the FOMC on September 16 rose to nearly 72%, up from 64% before the PPI announcement. Consequently, speculative assets, like cryptocurrencies, suffered, as Wall Street declined while U.S. Treasury yields climbed. Oil prices surged further, climbing past $100 a barrel for the first time since May 21, driven by renewed military action between the U.S. and Iran over the Strait of Hormuz.

Coinbase CEO Brian Armstrong expressed optimism about Bitcoin's current cycle, anticipating a price increase following the next halving event. Meanwhile, Hunter Biden's LAPTOP memecoin saw its value plummet nearly 99% within an hour post-launch on Base. Other major cryptocurrencies such as Ether, XRP, BNB, Cardano, and Solana also experienced a decline in value.