Crypto Prices Buoyed by Soft PPI Data; Bitcoin Tops $113K

Core Insights - Soft U.S. inflation data for August is temporarily pushing crypto prices higher, with the Producer Price Index (PPI) falling 0.1% month-over-month, contrasting with analyst expectations of a 0.3% rise [1] - Year-over-year PPI growth is at 2.6%, down from 3.1% previously and below forecasts of 3.3% [1] - The core PPI, excluding food and energy, also fell 0.1% in August, against a forecasted rise of 0.3% [2] - Year-over-year core PPI increased by only 2.8%, compared to estimates of 3.5% and July's 3.4% [2] Crypto Market Reaction - Bitcoin (BTC) rose to $113,700, up more than 1% over the past 24 hours, while Ether (ETH) experienced a similar increase and Solana's SOL rose by 3.3% to $224 [2] - The reaction in crypto markets was swift following the PPI data release [2] Economic Context - The latest PPI reading follows a significant increase in July that raised inflation concerns amid a weakening labor market [3] - Traders are closely monitoring the upcoming Consumer Price Index (CPI) report, which is crucial for assessing the Federal Reserve's interest rate decision [3] Market Sentiment - Analysts express cautious optimism regarding the PPI data, suggesting it may help suppress CPI inflation and allow the Fed to focus on labor market weaknesses [4] - Despite expectations of easier monetary policy benefiting risk assets like crypto, Bitcoin has shown volatility, rising initially but then pulling back [5] Federal Reserve Outlook - Market expectations indicate a strong likelihood of a 25 basis point rate cut at the next Federal Reserve meeting, with increased speculation about a possible 50 basis point cut [6] - The odds of a 50 basis point cut have risen to 10%, up from 7% prior to the PPI report [6]