Bitcoin on the Ropes! Surprise Inflation Report Puts Brakes on Bull Run

Bitcoin's price tanked after an unexpectedly high inflation report, which could throw a wrench in the Federal Reserve's plans for rate cuts.

The crypto market got a reality check this week. A new economic report just put a serious damper on Bitcoin's (BTC) recent hot streak. The Producer Price Index (PPI), a key measure of inflation, came in way hotter than anyone expected. This has investors spooked, worried that the Federal Reserve (the Fed) will keep interest rates higher for longer than they hoped.

Bitcoin plummets after surprise inflation data. Will the bullish trend continue or will the crypto market face a correction? / TradingView

Inflation Heats Up, Crypto Cools Down

The PPI report, which dropped on Thursday, showed a monthly jump of 0.9%. That completely blew past the 0.2% analysts were expecting, marking the biggest spike since March 2022. The annual rate also shot up to 3.3%, well above the 2.5% forecast.

This "sticky" inflation data puts the Fed in a tough spot. With prices rising, the central bank has less room to lower interest rates. And when rates are high, the U.S. dollar gets stronger, making riskier assets like crypto less appealing to investors.

Bitcoin Takes a Hit

Bitcoin felt the impact immediately, dropping 4.06% on the Binance platform. After hitting a new all-time high and getting rejected at a key resistance level, the world's top crypto closed at $118,295.

The sell-off was backed by a trading volume that was higher than the 25-day average, which shows just how much force was behind the move down. BTC fell back to an area that used to be resistance but is now acting as a crucial support level.

Is the Bull Run Over?

Despite the drop, it's not all doom and gloom for Bitcoin. The cryptocurrency is still holding above a key bullish trend line that's been in play since April. The big question now is whether this support will hold up against the selling pressure or if the trend is about to be broken.

Disclaimer: This article is for informational purposes only and is not financial advice. Investing in cryptocurrencies is risky, so always do your own research before making any investment decisions.