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The market crashes after the release of U.S. PPI data.
What shook investors was the Producer Price Index (PPI) of the United States. The July data was much higher than expected, which triggered a crash in the crypto market.
The PPI rose by 3.3% year-on-year, above economists' forecast of 3.0% and up from June.
The Producer Price Index is an economic indicator that measures how much the prices that American producers receive for their goods and services change, month after month.
If the PPI rises, it means that companies are facing higher costs for production. This increase in prices at the source can then be passed on to consumers, fueling inflation. A PPI higher than expected can therefore scare the markets because it reduces the chances of an interest rate cut by the Fed.
The 0.9% jump in the PPI, the highest since June 2022, has reignited fears in the crypto markets. After weeks of rallying, profit-taking was not long in coming. Traders liquidated digital assets before optimism over a possible rate cut in September faded.
The data also impacted the general sentiment in the United States. Many were betting on a more accommodative monetary policy. Even Donald Trump had pressured Jerome Powell to ease rates. The July CPI had strengthened hopes. But now, with such a high PPI, the outlook returns to uncertainty.
$538 million in long positions liquidated.
Immediately after the publication of the PPI data, sentiment collapsed. Investors reacted with a flurry of sales and liquidations followed quickly.
According to CoinGlass data, $1.04 billion was sold in the 24 hours following, with over 218,000 traders affected. In the first hour alone, $565 million evaporated, of which $538 million came from long positions.
