Inflation is the invisible killer of the crypto market, and the PPI exceeding expectations is like a stealthy deep-sea bomb, catching the market off guard!

Recently, the crypto market has been like a rollercoaster, thrilling enough to speed up heartbeats. On Tuesday, the CPI data gave the market a shot of confidence—up 3.0% year-on-year, lower than expected. Everyone excitedly bet on a 50 basis point rate cut in September, with Bitcoin surging to $124,000 and Ethereum touching $4,790. But on Thursday night, the PPI data poured cold water directly: up 3.3% year-on-year, and jumping 0.9% month-on-month, reaching a three-year high! The market instantly 'exploded'—Bitcoin dropped $7,000 in 15 minutes, Ethereum fell $340, and over $1 billion was liquidated in 24 hours with 210,000 people being 'bloodied'.

Why is the PPI so fierce? It's the barometer of production costs for businesses. When the PPI rises, it means that business costs are increasing, which will eventually be passed on to consumers, pushing up the CPI. This time, the PPI exceeded expectations primarily due to skyrocketing service prices. Companies that had previously endured tariff costs can no longer hold on and are starting to raise prices. Economists are warning: "Inflation may make a comeback in the coming months!"

For the crypto market, this is a double blow: expectations of interest rate cuts are cooling, the dollar is strengthening, and risk assets are being sold off; inflationary pressures are rising, and the Federal Reserve may pause interest rate cuts or even reconsider raising rates—this is undoubtedly a 'hard blow' for the crypto market, which relies on liquidity.

However, the short-term plunge feels more like an emotional release. The market was too optimistic before, with leverage piled too high. Once the data came out, the bulls collectively faced liquidation, and prices were smashed into a 'golden pit'. But in the long run, the core logic of the crypto market still revolves around supply and demand + institutional allocation.

What’s the next step? Don’t chase highs and sell lows; leverage trading carries high risks; pay attention to inflation-hedging assets like Bitcoin, as they may be more resilient; keep a close watch on September data—if CPI and PPI continue to exceed expectations, the market may drop further; if the data is cooler, a 25 basis point rate cut in September may lead to a market rebound.

Do you think the Federal Reserve will cut rates in September? Let's chat in the comments and avoid liquidation minefields together!

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