In brief
- Bitcoin dropped 1.3% to $102,655 after the April Producer Price Index (PPI) showed a surprising 0.5% decline in wholesale prices, contrary to economists’ expectations of a 0.2% increase.
- Investors remain cautious following mixed economic signals including a U.S.-China agreement to roll back tariffs for 90 days and the recent CPI data showing inflation in line with expectations.
- Many traders are awaiting the May 30 release of the PCE index for greater clarity on potential Fed policy changes.
Bitcoin slipped slightly Thursday after a closely watched inflation gauge showed wholesale prices in the U.S. registered a drop in April.
The Producer Price Index (PPI) for final demand fell 0.5% in April, the U.S. Bureau of Labor Statistics said Thursday, compared to economists’ expectations of a 0.2% monthly rise.
The index rose 2.4% over the past 12 months, slightly cooler than expectations. Core PPI, excluding food, energy, and trade services, edged down 0.1%, the first decline in that measure since April 2020.
In response, Bitcoin has fallen 1.3% to $102,655 after the report, paring gains from earlier in the session, as per CoinGecko data.
Ethereum has slipped 2.2% since yesterday, while Solana and Avalanche dropped 1.7% and 2.1%, respectively.
Meme coins like Dogecoin and Shiba Inu traded tktktk after drifting in tight ranges earlier this week following Tuesday’s CPI data.
PPI, which tracks what U.S. suppliers charge retailers and distributors, is a leading gauge of wholesale inflation, compiled by surveying over 100,000 product prices monthly, and serves as an early signal for consumer-side inflation trends.
The 0.5% decline in April was driven entirely by services, according to the report, which fell 0.7%, the sharpest drop since the series began in 2009.
Over two-thirds of the decline came from shrinking margins in final demand trade services, particularly machinery and vehicle wholesaling, which plunged 6.1%, according to the Bureau of Labor Statistics.
“I don’t view the PPI as a significant catalyst for Bitcoin in the current environment, especially given the market’s muted response to the recent CPI data,” Aurélie Barthere, Principal Research Analyst at Nansen, told Decrypt.
The analyst noted that unless the PPI came in “meaningfully above expectations,” even a mild upside surprise—“say, 10bps”—was unlikely to shift either Bitcoin’s direction or the market’s outlook on Fed rate cuts.
Still, traders are watching for more than just the inflation figure. All eyes are now on Fed Chair Jerome Powell’s remarks scheduled later Thursday, an event that many analysts say could overshadow the data.
“If Powell signals no urgency to ease policy, saying something like ‘we’re not in a rush to cut’—markets could still turn defensive,” said Tracy Jin, COO of crypto exchange MEXC, told Decrypt.
That scenario is far from guaranteed. The Fed has held its benchmark rate at 4.25%–4.50% for four straight meetings, resisting calls from President Trump to begin easing policy ahead of the November election.
Jin warned that a hawkish tone from Powell could trigger “a brief shakeout,” particularly in overheated altcoins, and said Bitcoin might retest key support zones near $97,000—or even slip as low as $93,000.
Fed Chair Jerome Powell’s remarks
Not long after the new data was released, Federal Reserve Chair Jerome Powell reiterated that the Fed remains “fully committed to the 2% [inflation] target today” but that it is weighing revising its consensus statement “in coming months.”
He specifically mentioned the Fed might adjust its language around shortfalls, forecasts, and uncertainty.
“As we have been reviewing assessment of the 2020 and of policy decisions in recent years, a common observation is the need for clear communications as complex events unfold,” Powell said. “A critical question is how to foster a broader understanding of the uncertainty that the economy general faces in periods of larger, more frequent, or more disparate shocks.”
Markets initially rallied earlier this week after the U.S. and China agreed to roll back retaliatory tariffs for 90 days.
CPI data on Tuesday also helped cool nerves, with consumer prices rising just 0.2% month-over-month and 2.3% annually, both in line with expectations.
Amid these developments, Jin noted, “the smarter strategy now is to wait for better long entry zones, rather than chase strength into uncertainty.”
Investors now await the May 30 release of the Fed’s preferred inflation gauge, the PCE index, for further clarity on whether the central bank will stay patient or pivot.
Ahead of the report drop, analysts at crypto payment provider B2BinPay told Decrypt how Bitcoin had “rallied significantly over the past two weeks without a meaningful correction,” and cautioned that a retracement, even if not immediate, could reach around 2% as investor caution picked up.
Edited by Stacy Elliott.
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