Bitcoin, collapses below $80,000 amid inflation shock... 'Emergency' to defend $79,500 support line

▲ Bitcoin (BTC) decline/AI generated image

As the U.S. Producer Price Index (PPI) soared to its highest level since 2022, Bitcoin (BTC) gave up the $80,000 mark, reflecting renewed fears of interest rate tightening in its price.

Cointelegraph reported on May 13 (local time) that Bitcoin slipped below $80,000 ahead of Wednesday's Wall Street opening after the announcement of the U.S. April Producer Price Index. According to TradingView data, Bitcoin fell to around $79,500 with the PPI announcement.

The U.S. Bureau of Labor Statistics (BLS) announced that the Producer Price Index for final demand rose 1.4% month-over-month in April. This is the largest monthly increase since a 1.7% rise in March 2022. On an unadjusted basis, the index rose 6.0% over the 12 months ending in April, the highest annual increase since 6.4% in December 2022. With the PPI coming in stronger than expected, following the Consumer Price Index (CPI) announced the day before, the burden on cryptocurrencies and risk assets in general has increased.

Cointelegraph reported that the U.S.-Iran conflict and the shock of high oil prices are spreading throughout the economy. Trading resource The Kobeissi Letter stated on X (formerly Twitter), “All the data is very clear. Consumers are about to face another serious squeeze on their purchasing power.” High oil prices and inflationary pressures have weakened expectations for the Federal Reserve (Fed) to ease financial conditions.

According to CME Group's FedWatch data, the probability of an interest rate cut at the June Federal Open Market Committee (FOMC) meeting remained at just 1.4%. Mosaic Asset Company pointed out that high oil prices could weigh on the upward trend of risk assets, and the possibility of rising short-term and long-term interest rates could challenge stock market valuations. The company explained, “The dovish bias of central banks around the world is shifting to a more hawkish stance.”

However, some traders believe there is still room for Bitcoin to rebound if it breaks through current resistance levels. Daan Crypto Trades analyzed that if Bitcoin breaks above the $82,000 area, the $84,000 gap is likely to be filled, potentially leading to higher price levels. Rekt Capital assessed that Bitcoin is moving within an open gap in the CME Group Bitcoin futures market and that the weekly close formed below the top of the red zone, suggesting it will trade sideways within the CME gap for a while.

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