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- Bitcoin surpassed $114K after weaker-than-expected US inflation data.
- Fed rate cuts historically trigger BTC volatility followed by upward rallies.
- MVRV and Whale Ratio suggest potential accumulation phases for Bitcoin investors.
Bitcoin (BTC) climbed above $114,000 for the first time since August 24, extending its recent recovery as US inflation figures surprised markets on the downside. The August Producer Price Index (PPI) fell to 2.6% year-over-year, far below forecasts of 3.3%, while core PPI dropped to 2.8%, under the 3.5% consensus. Monthly PPI even turned negative, marking only the second contraction since March 2024. Investors are interpreting these figures as a signal that Federal Reserve interest rate cuts may be imminent.
US Inflation Trends Signal Cooling Pressures
The recent PPI release adds to a series of dovish signals in the US economy. July inflation data was revised lower, with headline PPI adjusted to 3.1% and core PPI to 3.4%. Earlier this week, historic US jobs data revisions erased 911,000 positions from the past year, further fueling speculation that the Fed could pivot toward easing. Market analysts note that producer inflation trends typically lag behind the Consumer Price Index (CPI) by one to three months, meaning some CPI “stickiness” could still emerge in the short term.
BREAKING: August PPI inflation FALLS to 2.6%, below expectations of 3.3%.
— The Kobeissi Letter (@KobeissiLetter) September 10, 2025
Core PPI inflation fell to 2.8%, below expectations of 3.5%.
Month-over-month PPI inflation was NEGATIVE for just the 2nd time since March 2024.
Rate cuts are on their way.
Bitcoin’s Historical Reaction to Fed Rate Cuts
Historically, Bitcoin has responded positively to Federal Reserve easing cycles, albeit with short-term turbulence. Onchain metrics like Market Value to Realized Value (MVRV) and Whale Ratio help track this trend. MVRV indicates when BTC is undervalued or overheated, while Whale Ratio monitors large-holder transaction activity. Data from CryptoQuant shows that during the March 2020 rate cuts, MVRV dropped toward 1 as panic selling spiked, followed by accumulation that fueled the 2020–2021 bull run. A similar pattern appeared during late 2024 easing, suggesting BTC could rally again as liquidity increases in 2025.
Looking Ahead: Volatility Meets Opportunity
While initial volatility is likely as markets react to anticipated Fed cuts, historical patterns indicate that these periods often lay the foundation for renewed upward momentum. With both MVRV and Whale Ratio signaling potential accumulation phases, Bitcoin investors may find strategic opportunities as macroeconomic conditions continue to favor crypto markets.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
Also Read: Metaplanet Raises $1.4B to Accelerate Bitcoin Holdings and Cement Asia Leadership
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
