- On October 11, the United States released Producer Price Index (PPI) inflation data for September, which exceeded expectations at a 2.2% increase, the largest since April 2023.
- In September, U.S. PPI showed an above-expectation increase due to rising energy prices. PPI is considered a leading indicator of inflation.
- Compared to the overall cryptocurrency market, the price of Bitcoin (BTC) has exhibited relative stability and is currently just above $27,000.
Critical U.S. Producer Price Index reports were released; Bitcoin investors will now focus on Thursday: Inflation could be a determining factor!
U.S. PPI Reports Released
On October 11, the United States released Producer Price Index (PPI) inflation data for September, which exceeded expectations at a 2.2% increase, the largest since April 2023. This development could put more pressure on risky assets like stocks and cryptocurrencies.
The monthly PPI rate came in at 0.5%, surpassing the expected 0.3%, and the previous value was 0.7%. In September, U.S. PPI showed an above-expectation increase due to rising energy prices. PPI is considered a leading indicator of inflation. The driving force behind inflation pressures was generally the rise in the final demand for goods, which increased by 0.9% on a monthly basis, while services increased by 0.3%.
Market observers consider PPI a leading indicator of inflation because it assesses a wide range of costs related to materials in the production process that eventually affect consumer products.
On Thursday, October 12, the Labor Department will release closely monitored Consumer Price Index data. Expectations suggest a slight slowdown in the inflation rate. If so, it could prevent selling pressure on stocks and crypto.
Bitcoin and Inflation
So far, Bitcoin has shown good resilience to changing macro conditions and inflation pressures. Compared to the overall crypto market, the BTC price has exhibited relatively low volatility and is currently just above $27,000.
As previously reported, Bitcoin whales have shown confidence during this test period, accumulating more than 20,000 Bitcoins since the beginning of the month. Additionally, Bitcoin’s institutional funds saw healthy inflows last week.
However, as Bitcoin’s halving event approaches in 2024, as scheduled around the middle of the year, the next six months could be crucial in terms of volatility for investors. Billionaire Paul Tudor Jones has also warned about rising geopolitical tensions in the market. Nevertheless, he sees Bitcoin and gold as inflation hedges.
It’s worth noting that the IMF has already issued warnings about sticky inflation and weak growth in 2024, which could further impact Bitcoin’s price rally after the halving.
In recent days, officials from central banks suggested that they may not need to make more interest rate hikes independently, given the significant increase in Treasury yields tightening financial conditions. This development helped alleviate market concerns and boosted stocks this week.
