The crypto market has seen a brief recovery following Friday’s softer than expected US producer inflation report, with Bitcoin rebounding toward $70,000 after heavy selling pushed it below $69,000 earlier in the day.
Summary
- US producer prices rose 0.3% in October, below the 0.4% forecast, while annual inflation reached 6.5%.
- Bitcoin briefly recovered toward $70,000 after the PPI release, triggering roughly $39 million in short liquidations.
- More than $1.4 billion in leveraged crypto positions were liquidated over 24 hours as Bitcoin and Ethereum faced heavy selling.
- Swyftx analyst Pav Hundal said softer inflation could weaken the dollar and ease selling pressure on Bitcoin.
- Persistent annual inflation kept traders focused on the Federal Reserve’s December interest rate decision.
According to the US Producer Price Index report, wholesale prices rose 0.3% in October, below economists’ forecast of 0.4%, while annual producer inflation reached 6.5%, compared with expectations of 6.6%.
Bitcoin initially moved higher following the November 13 release, triggering roughly $39 million in short liquidations within an hour, according to CoinGlass data.
The recovery followed a difficult trading session for cryptocurrencies, with Bitcoin falling to its lowest level since August and Ethereum slipping below $2,000. Across the market, more than $1.4 billion in leveraged positions had been liquidated over the preceding 24 hours.
Although the monthly inflation figures offered some relief, annual producer prices continued rising faster than in September, leaving investors focused on whether the Federal Reserve could raise interest rates again in December.
US PPI data gives crypto market some relief
The latest inflation report showed producer prices rising at a much slower monthly pace than September, when the index climbed a revised 1.4%.
Goods prices rose 0.5% in October, driven largely by food and basic organic chemicals, while services prices increased 0.2% for the fifth consecutive month.
Core PPI, which excludes food and energy, rose 0.3% month over month, matching forecasts, while its annual reading remained at 5%.
Traditional financial markets responded positively to the figures. US stock index futures moved higher following the release, while the dollar weakened and Treasury yields eased as traders reassessed expectations for further monetary tightening.
Ahead of Friday’s report, Swyftx lead analyst Pav Hundal had identified the inflation figures as a possible turning point for Bitcoin and the dollar.
“A softer reading could start the dollar unwind and ease the selling bias on bitcoin,” Hundal wrote in a November 12 market note.
The analyst had warned that a stronger than expected reading could prolong Bitcoin’s decline, particularly after the US dollar reached a 19-month high following Tuesday’s consumer inflation report.
Bitcoin rebound triggers short liquidations after heavy losses
Bitcoin’s initial recovery caught some bearish traders off guard after a prolonged selloff had already forced leveraged investors out of their positions.
CoinGlass figures cited by BeInCrypto showed that roughly 83% of the $1.42 billion in liquidations over the preceding 24 hours involved traders betting on higher cryptocurrency prices.
One particularly large position attracted attention shortly before the inflation figures were published.
According to Hyperbot data, a trader opened a leveraged Bitcoin short position worth approximately $52 million on Hyperliquid around 50 minutes before the release.
The position involved 750 BTC, with an average entry price near $69,008 and liquidation estimated at $70,986.
Crypto commentator Crypto Rover highlighted the trade on X, questioning whether the trader expected another major Bitcoin decline ahead of the economic data.
Meanwhile, crypto.news previously reported that Bitcoin had fallen roughly 7% before the release, while Ethereum lost more than 6%. Solana, BNB and XRP suffered losses as investors reduced exposure to riskier assets.
The selloff coincided with turmoil surrounding Nvidia’s leadership, weakness in technology stocks and renewed geopolitical tensions in the Middle East.
Fed rate expectations remain a concern for Bitcoin
Despite the cooler monthly producer inflation reading, annual wholesale inflation accelerated from 6.3% in September to 6.5% in October, its highest level since November 2022.
The figures followed Tuesday’s consumer inflation report, which showed prices rising 0.4% in October, above economists’ expectations of 0.3%.
Reuters reported that investors remained divided over whether the Federal Reserve would raise interest rates by 25 or 50 basis points at its December meeting.
The central bank held its benchmark rate at 3.75% to 4.00% in October, while stronger employment figures and persistent inflation have kept expectations of further tightening alive.
BTSE Chief Operating Officer Jeff Mei warned that a larger rate increase could deepen cryptocurrency losses.
“If the Fed hikes rates by 50 basis points rather than the expected 25 basis points, bitcoin and other cryptocurrencies could have more room to fall,” Mei told crypto media.
Meanwhile, the market continues to face pressure from declining liquidity. Glassnode identified a $14.2 billion contraction in stablecoin supply over 30 days through November 9, the largest decline since June 2022.
US spot Bitcoin exchange-traded funds recorded $299.8 million in net withdrawals on November 11, while Ethereum funds lost another $144.8 million, according to Farside Investors data.
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