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ZEC $1,193 Bitcoin and XRP fall as US producer prices jump to 6.3%
Hotter-than-expected inflation data renewed concerns about Federal Reserve rate hikes, weighing on crypto markets.
Key takeaways
- Inflation shock. September producer prices rose 1.3% monthly and 6.3% annually, both exceeding forecasts.
- Rate hike odds. CME FedWatch data shows 34% probability of a 25 basis point rate increase in October.
What happened
Bitcoin and XRP fell on October 15 as the US released stronger-than-expected producer inflation data. Bitcoin dropped 3.6% to trade near $81,500, with a 24-hour low of $80,443. XRP slid more than 5% to near $1.30. The declines followed a hotter-than-expected consumer inflation report the day before.
US producer prices rose 1.3% in September on a monthly basis, marking the largest monthly increase since March 2022. Annual wholesale inflation reached 6.3%, well above the forecast of 5.4% and higher than the prior month's 5.6%.
The inflation readings strengthened near-term rate hike expectations. Markets now price 34% odds of a 25 basis point rate increase in October and 66% chances the Federal Reserve will pause, according to CME FedWatch data.
Bitcoin fell below its 50-day moving average following the release. Energy prices drove more than 80% of the increase in final-demand goods prices in September, with gasoline prices jumping 20.3%, according to the US Bureau of Labor Statistics.
First $1.52Latest $1.34-11.8% over the period
Points are daily observations, not closing prices.
Why it matters
Hotter inflation readings raise pressure on the Federal Reserve to maintain higher interest rates for longer, which weighs on risk assets like cryptocurrencies. Stronger retail sales data, which rose 0.8% in September, opened room for another potential rate increase this month despite mixed rate expectations.
Investors now await comments from Fed Chair Kevin Warsh later today. Any hawkish remarks on inflation or monetary policy could further pressure Bitcoin, stocks and other risk assets, while a more measured tone might offer temporary relief.
Questions readers ask
Why did Bitcoin and XRP prices drop on October 15?
Stronger-than-expected US producer inflation data renewed concerns about Federal Reserve rate hikes. Bitcoin fell 3.6% and XRP dropped more than 5% after annual wholesale inflation came in at 6.3%, above the 5.4% forecast.
What were the September producer inflation figures?
US producer prices rose 1.3% monthly, the largest increase since March 2022, and 6.3% annually, the fastest annual rise since December 2022. Both figures exceeded forecasts.
What is the probability of a Fed rate hike in October?
CME FedWatch data shows 34% odds of a 25 basis point rate increase in October, with 66% chances the Federal Reserve will pause.
What happens next for crypto markets?
Markets await remarks from Fed Chair Kevin Warsh. Hawkish commentary on inflation could further pressure Bitcoin and other risk assets, while a measured tone might provide temporary relief.
