Why Did the Crypto Market Drop Recently?

The sharp dip in the crypto market was triggered by a hotter-than-expected US Producer Price Index (PPI) report.

📊 What happened?

July 2025 PPI rose 0.9% month-over-month and 3.3% year-over-year — both well above forecasts.

Core PPI (excluding food & energy) jumped 0.6% MoM and 2.8% YoY — the biggest annual gain in 3 years.

👉 What does it mean?

These numbers signal rising inflationary pressures, not cooling — a red flag for markets.

🏦 Impact on interest rate expectations:

Traders had been expecting the Fed to begin cutting rates soon.

But with inflation heating up, the Fed may delay any rate cuts — or even consider further tightening.

📉 Market reaction:

A risk-off mood hit both stocks and crypto.

Investors shifted to safer assets like the USD and bonds.

Bitcoin fell from ~$124K to ~$119K.

Ethereum dropped ~4%, trading near $4,550.

🔑 In summary:

Stronger-than-expected inflation data → Fed less likely to cut rates soon → Investors de-risk → Crypto prices drop.