Bitcoin fell below $77,000 on Thursday after the U.S. Bureau of Labor Statistics released Producer Price Index data showing a 0.4% monthly increase. The decline sent ripples through cryptocurrency markets as investors assessed implications for Federal Reserve policy.
According to Bitstamp data, bitcoin reached a daily low of $76,651 shortly after the inflation report, dropping from its prior consolidation range between $78,000 and $79,000. The price briefly recovered above $77,000 but remained down more than 2.5% over 24 hours, with market capitalization falling to $1.55 trillion.
Liquidation Surge
The sharp price movement triggered substantial derivative liquidations. Nearly $74 million in long positions were liquidated within four hours of the PPI release, pushing 24-hour long liquidations to $112 million compared to $8 million in shorts. Across all cryptocurrency markets, liquidations peaked at $562 million, with long positions accounting for approximately $484 million.
Rate Hike Expectations Rise
Following the inflation data, betting markets shifted expectations for Federal Reserve policy. Polymarket and Kalshi bettors raised odds of a 25-basis-point rate hike to 63%, a 9-percentage-point jump, while the CME FedWatch tool showed 67%. Economists anticipate an upcoming consumer price index report will show the annual inflation rate slowed to 3.3% in August from 3.4% in July, though monthly consumer prices are expected to rise 0.4%.
Broader Market Pressures
Bitcoin's decline reflected broader macroeconomic tensions. U.S. Treasury 10-year yields surged past 4.90%, rising 95 basis points since earlier in the year and adding 10 basis points after the Treasury expanded buyback operations to $6 billion. Analysts noted that bond market dynamics are being driven by underlying economic factors including elevated crude oil prices and record issuance volumes.
Through ten days of September, bitcoin had made no upward progress month-to-date, raising questions about whether the cryptocurrency will close the month flat without a significant macroeconomic catalyst.
