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BTC tests $114,000 for a cooler US PPI while Fed cuts loom

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Japan’s Metaplanet Acquires 2,205 More Bitcoin, Total Holdings Reach 15,555
Japan’s Metaplanet Acquires 2,205 More Bitcoin, Total Holdings Reach 15,555

The key takeaways

  • Bitcoin has risen to $114,000, as PPI inflation data shows a sharp decline in August.

  • The data, according to traders, could force the Federal Reserve into lowering rates for September.

  • The long-term trend of the onchain shows that there is a short-term upswing after Fed rate cuts and then a longer-term downswing.

BitcoinBTCThe US Inflation data was much lower than expected. This move comes after the release of August Producer Price Index, which fell to 2.6% compared with forecasts for 3.3%. Food and Energy are excluded from the Core PPI. It fell below expectations of 3.5% to 2.8%.

Bitcoin Four-Hour Chart Source: Cointelegraph/TradingView

According to The Chartered Institute of Bankers, the PPI turned negative on a monthly base, the only contraction that has occurred since March 2024. Kobeissi newsletter. The inflation numbers for July also were revised downwards, with the PPI headline adjusted down to 3.1% (from 3.4%) and PPI core adjusted up to 3.4% (from 3.7%). Markets are increasingly expecting interest rate reductions, in addition to this week’s historic revision of US employment data, which saw 911,000 fewer jobs over the last 12 months.

Market Analyst Skew noted Producer inflation tends to be one-to-three months behind the Consumer Price Index. CPI numbers could remain sticky in the near future, but the longer-term trend indicates a cooling of inflation through Q4. Although the PPI is encouraging, it may be that hedge flows continue until CPI confirms an easing trend.

Related: Bitcoin must hit $104K to repeat past bull market dips: Research

Bitcoin’s reaction historically to Fed rate cut

Bitcoin history is consistent with turbulence, followed by an upward trend. The two onchain metrics Market Value to Actual Value (MVRV), and Whale Ratio shed more light.

MVRV is a measure that compares Bitcoins’ market capitalization with its actual capitalization, or the value of coins at their last transaction. When MVRV hovers near 1, BTC is typically undervalued, and levels near 3–4 suggest overheated valuations.

Whale Ratio, on the other hand, measures how many large holders are involved in transactions, and shows when they send coins for sale or pull them back to store.

Cryptocurrencies, Federal Reserve, Government, Bitcoin Price, Markets, United States, Cryptocurrency Exchange, Interest Rate, Price Analysis, Market Analysis
Source: Bitcoin MVRV rate Source: CryptoQuant

CryptoQuant Data highlights In March 2020, the interest rate cut sent MVRV crashing towards 1, as investors panicked and lost their speculative profits, while Whale Ratio spiked due to heavy whale sales.

As liquidity flooded in, the MVRV rebounded, and whales shifted to accumulation, fueling Bitcoin’s 2020–2021 bull run. The pattern was repeated in the 2024 ease cycle when both indicators showed short-term sales before stabilizing and a new rally.

The Fed’s easing of policy in 2025 will likely bring volatility at first, but provide the overall liquidity to allow Bitcoin to reach new heights.

Related: Bitcoin traders cut risk over macro worries, but BTC market structure targets $120K

This article contains no investment recommendations or advice. Risk is inherent in every investment decision and trade. The reader should always do research prior to making a final decision.