- Bitcoin fell 2% and Ethereum dropped 4.5% after hotter-than-expected PPI data.
- Over $1B in crypto positions were liquidated, mostly from long bets.
- Odds for a September Fed rate cut remain high at 92%, but volatility likely stays elevated.
Bitcoin slid over 2%, while Ethereum’s native token saw a sharper drop after fresh U.S. inflation data came in hotter than expected, rattling sentiment and triggering a wave of leveraged liquidations across crypto markets.
The July Producer Price Index (PPI) surged 0.9% month-over-month and 3.3% year-over-year — the fastest annual pace since February. Economists were only looking for about 2.5% annually, so the beat landed like a cold bucket of water on risk markets. Within hours, CoinGlass data showed more than $1 billion in positions wiped out, including around $782 million in longs. The single largest hit? A $6.25 million ETH/USDT long on Bybit.
Macro Worries Return — But Rate-Cut Hopes Linger
The hotter PPI print stirred fears that inflationary pressures in the supply chain could make the Federal Reserve more cautious on rate cuts. Still, the CME FedWatch Tool suggests traders aren’t entirely rattled — odds of a September cut sit at 92%, down slightly from 94% earlier this week. For now, the market seems willing to treat the spike as an outlier, unless next week’s data says otherwise.
Leverage Builds, Volatility Flares
As The Block previously flagged, open interest across altcoins has ballooned to a record $47 billion. That kind of leverage is a double-edged sword — it can turbocharge rallies, but when volatility spikes, it’s a quick trip to liquidation city. The timing of the PPI data, so soon after a softer CPI report, caught positioning off-guard and set up a violent two-way move.
What’s Next for Traders
With inflation signals now mixed and leverage still sky-high, analysts are warning of more sharp swings into next week. Jobs data and the release of minutes from the last Federal Open Market Committee meeting could reset the macro narrative — or add more fuel to the fire. For now, traders are bracing for both directions, knowing that in a market this stretched, even a small surprise can hit like a hammer.
