Important Points:
- After concerning U.S. PPI data raised inflation fears, Bitcoin’s value slid below $118,000.
- The likelihood of a Federal Reserve interest rate decrease fell from 99.8% to 90.5%.
- Technical signals hint at possible pullbacks in Bitcoin, potentially clearing the way for altcoin rallies.
Bitcoin (BTC) has experienced a significant decline, retracing from a new peak of $123,400 to $117,400 on Thursday. This downturn coincided with the release of U.S. Producer Price Index (PPI) figures that exceeded expectations, shaking the market.
The recently published PPI revealed an annual headline inflation rate of 3.3%, surpassing both the anticipated 2.5% and the previous month’s 2.3%. This marks the most substantial monthly increase in U.S. producer prices since June 2022. These elevated price pressures contrast sharply with the more moderate July Consumer Price Index (CPI) data from Tuesday, which indicated a stable headline inflation rate of 2.7% year-over-year and a core CPI of 3.1%, bolstering confidence in risk assets at the time.
While the CPI data fostered optimism regarding a potential near-term interest rate reduction, the higher PPI figures introduce uncertainty. Elevated producer prices imply enduring inflationary forces, potentially leading the Federal Reserve to postpone any loosening of monetary policy. This scenario could dampen Bitcoin’s upward momentum in the immediate future.
According to data from CME FedWatch, there is still a 90.5% chance of a 0.25% rate cut on September 17, although it’s worth mentioning that this probability had surged to 99.8% on Wednesday.
🇺🇸 UPDATE: The probability of a U.S. Federal Reserve rate cut in September has risen to 99.8%. pic.twitter.com/vfHn97vxPY
— Cointelegraph (@Cointelegraph) August 13, 2025
Read More: Bitcoin’s Record Price Surge Sparks Debate: Has BTC Peaked at $124K?
Bitcoin: Key Price Levels to Monitor
Although the hotter-than-expected U.S. PPI print accelerated Bitcoin’s pullback, indications of bearish sentiment were present beforehand. Cointelegraph pointed out a divergence between Bitcoin’s price and the Relative Strength Index (RSI) after BTC reached new highs above $123,000, possibly signifying a liquidity grab from prior highs. The subsequent price drop also formed a swing pattern failure, suggesting potentially volatile price movements in the coming days.
Technically, Bitcoin’s recent leveraged unwinding has absorbed significant liquidity areas between $119,000 and $117,500. Currently, the most plausible scenario is a period of consolidation, following an 11% increase in value over the preceding 12 days.
A bullish outlook would necessitate a strong close above $120,000 on the four-hour chart. However, the likelihood of a retest below $117,000 has increased, driven by a long-term market fractal pattern.
On the three-day chart, Bitcoin has established a double top pattern, a structure that was previously observed in January. This pattern preceded a period of corrections in Q1 2025, during which Bitcoin’s value fell to approximately $75,000.
If Bitcoin holds above $112,000, altcoins could flourish within a consolidation-based environment. A break below $112,000, however, would signal a change in the short-term market dynamics, possibly triggering corrections towards areas of interest between $105,000 and $110,000.
Also See: Bitcoin Dips Below $119K After US Official Dismisses Bitcoin Reserve Plans
This analysis is for informational purposes only and does not constitute financial advice. Trading cryptocurrencies involves substantial risk, and investors should conduct their own thorough due diligence before making any investment decisions.