Crypto Takes a Hit: What's Shaking Up the Market?

Crypto prices took a tumble recently, and it's all thanks to some unexpected news. The Producer Price Index (PPI) shot up by 0. 9% in July, which is a big deal because it's the highest jump in over three years. This news caught everyone off guard, especially since experts were only expecting a 0. 2% rise. Bitcoin, Ethereum, and other cryptocurrencies felt the pinch. Bitcoin dropped to around $118, 000, which is a 2. 9% decrease from the day before. Ethereum wasn't far behind, also falling by 2. 9% to $4, 560. Even Solana and XRP saw declines, with Solana dropping 2. 4% to $194 and XRP falling 5. 7% to $3. 07. This PPI report put a damper on what had been a pretty good week for Bitcoin. Just the day before, Bitcoin had reached a new all-time high above $124, 000, and Ethereum was inching closer to its own record levels. So, why does the PPI matter so much? Well, it tracks price changes for a wide range of goods and services. A big jump like this one is a red flag for the Federal Reserve, which has been trying to keep inflation in check. The Fed has been holding off on cutting interest rates this year, partly because of concerns about U. S. President Donald Trump's tariffs making it harder to hit their 2% inflation target. Traders had been hopeful for a rate cut, but the PPI report put a damper on those hopes. The chances of a quarter-percentage-point rate cut in September dropped slightly, from 94. 3% to 92. 8%. And the idea of a bigger, 50-basis-point rate cut? That pretty much disappeared, falling from 5. 7% to 0. 0%. Adding to the mix, U. S. Treasury Secretary Scott Bessent said the government isn't planning to buy more Bitcoin to add to its existing holdings. Earlier, there had been talk about the White House buying Bitcoin in a budget-neutral way, but Bessent made it clear that the government will be using confiscated assets to build up its Bitcoin reserve instead.