Bitcoin declines after PPI, liquidations reach $562M

After the release of US inflation data, crypto liquidations reached $562 million. Bitcoin fell as low as $76,651 as bullish positions bore the brunt of the losses.

Bitcoin decline hits long positions especially hard

Bitcoin was progressing between 78,000 and 79,000 dollars before the publication of the American producer price index. This announcement quickly pushed its price below $77,000. BTC then recorded a daily low on Bitstamp at $76,651.

Then the crypto rebounded. However, it showed a decline of more than 2.5%, with a valuation close to $1.55 trillion. This pullback triggered the closing of multiple leveraged positions.

The breakdown of liquidations reveals that bullish investors suffered the heaviest losses:

• The crypto market recorded $562 million in liquidations over 24 hours;
• Long positions amounted to approximately $484 million;
• Bitcoin had $112 million in long positions liquidated;
• Nearly $74 million in long positions disappeared in just four hours.

Bitcoin short sellers lost nearly $8 million. The ratio between long and short liquidations is therefore around fourteen to one for this asset. Such an imbalance confirms that the market was essentially positioned for a rebound before the decline.

Liquidation may occur when the platform immediately closes a position that has become insufficiently guaranteed. Thus, leverage amplifies losses triggered by relatively small price fluctuations.

The PPI climbs 5.4% over one year

This movement followed the publication of the Producer Price Index, or PPI. Such an indicator measures the progression of prices received by American producers. It can then announce future pressures on the prices paid by consumers.

According to the U.S. Bureau of Labor Statisticsthe PPI increased by 0.4% in August compared to July. This monthly increase corresponded to economists’ forecasts. It therefore does not represent a surprise in itself, contrary to what the immediate market reaction suggests.

However, the annual rate increased by 5.4%, compared to 4.8% in July. In addition, prices increased by 1.1%, while those of services accelerated by 0.1%. As for energy costs, they jumped by 4.2%, notably due to a 24.1% surge in diesel.

This on-chain data consolidates the risk of a further increase in Federal Reserve rates. Thus, Carl Weinberg, chief economist of High Frequency Economics, declared :

This report reveals future cost increases and will support Committee members who want to raise rates now.

The chances of a rate hike are increasing

Just after publication, punters at Polymarket and Kalshi had assigned a 63% probability to a 25 basis point hike. Such an estimate had gained nine points. The CME FedWatch had then displayed nearly 67%.

Then, futures brought that probability to around 70%. An increase in rates usually boosts the returns on bond investments and reduces the attractiveness of risky assets. It may also support the dollar, putting additional pressure on bitcoin.

The yield on ten-year US Treasury bonds has also exceeded 4.90%. Also, the bond acquisitions carried out by the Treasury did not prevent this increase. The Kobeissi Letter indicated on the social network X: “this confrontation between the authorities and the bond market prepares for a very eventful fourth quarter”.

Now the market is watching the consumer price index. This report could provide a second signal on the progression of inflation before the next Fed meeting.

A high number would strengthen the scenario of a rate hike and keep bitcoin under pressure. Conversely, a slowdown in prices would reduce these expectations. In the immediate future, the ability of BTC to defend the $76,500 to $77,000 zone remains the main technical indicator to follow.