FameEX Hot Topics | Bitcoin Faces Increased Sell-Off After US Inflation Data Stirs Stock and Crypto Volatility

Bitcoin experienced a sharp decline after a higher-than-expected US Producer Price Index (PPI) report caught traders off guard. The price of Bitcoin pulled back significantly from its recent all-time high of $123,400, falling to $117,400 by Thursday. The correction came in the wake of a PPI print that revealed annual headline inflation had surged to 3.3%, far surpassing the forecast of 2.5% and the previous month's reading of 2.3%. This marks the largest monthly increase in US PPI since June 2022, adding to the market's concerns about inflationary pressures.

The unexpected rise in PPI sharply contrasts with the cooling Consumer Price Index (CPI) data released earlier in the week, which showed headline inflation holding steady at 2.7% year-over-year, with core CPI at 3.1%. The CPI data had previously fueled optimism for a near-term interest rate cut, reinforcing the bullish case for risk assets. However, the hotter-than-expected PPI print complicates that narrative, as it indicates that inflationary pressures remain persistent, potentially forcing the Federal Reserve to delay its plans for monetary easing. For Bitcoin, this could limit its short-term upside momentum, as the market braces for continued inflation concerns.

Despite the bearish correction triggered by the PPI data, warning signs had emerged earlier. A bearish divergence between Bitcoin’s price and its relative strength index (RSI) appeared after Bitcoin reached new highs above $123,000, suggesting a possible liquidity grab at those levels. This was followed by an immediate price dip, which formed a swing pattern failure, indicating the potential for choppy price action in the coming days. While Bitcoin’s recent surge had absorbed key liquidity zones between $119,000 and $117,500, the technical outlook now suggests a period of sideways consolidation, especially after an 11% rise in just 12 days.

From a technical perspective, Bitcoin’s path forward remains uncertain. A bullish scenario would require a decisive close above $120,000 on the four-hour chart, signaling a potential continuation of the upward trend. However, the likelihood of a retest below $117,000 has increased, as indicated by a long-term market fractal pattern. On the three-day chart, Bitcoin has formed a double-top pattern, a structure reminiscent of January's price action, which led to a correction that saw Bitcoin drop as low as $75,000 during Q1 2025.

Looking ahead, Bitcoin’s support at $112,000 will be critical for determining its future trajectory. If Bitcoin manages to hold above this level, it could provide an environment where altcoins thrive in a consolidation-driven market setup. However, a drop below $112,000 would signal a shift in the lower time frame market structure, possibly triggering further corrections toward key levels of interest between $105,000 and $110,000.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.