Recent data reveals a cooling in inflation rates, with notably interesting implications for the cryptocurrency market. Bitcoin and Ethereum enjoyed a brief rally, only to give up those gains shortly after.
Oddly enough, this volatility in the cryptocurrency market does not reflect the clear shift of the US economy towards de-inflation.
Bitcoin and Ethereum Volatility Spike after Soft PPI
In a surprising turn, the top altcoins saw a slight uptick in volatility as headline US inflation data showed a cooldown.
Bitcoin, the world’s largest cryptocurrency, saw a gain of 0.60%, rising from $30,500 to $30,683. Ethereum, its closest competitor, saw a jump of 0.39%, rising from $1,880 to $1,887. The overall cryptocurrency market followed suit, with the total market capitalization jumping 0.44% from $1.153 trillion to $1.158 trillion.
After the price jump, a bearish swing followed, erasing almost all the gains made after the release of The Producer Price Index of the Bureau of Labor Statistics.
The sudden spike in volatility comes as US producer prices in June posted only a minute increase. Which indicates later that the economy entered the stage of removing inflation. The annual increase in producer inflation was the smallest in nearly three years, shifting investor sentiment.
US Department of Labor mentioned The producer price index for final demand rose just 0.1% in June.
Data for the previous month was revised to reflect a 0.4% decline in the producer price index, in contrast to the initially reported decline of 0.3%. The year-on-year increase for June was 0.1%, the smallest increase since August 2020.
Contrary to economists’ expectations, inflation rates appear to be declining. The slowdown in the June PPI was attributed to the disappearance of supply chain bottlenecks and the slowdown in demand for commodities due to higher interest rates.
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