Bitcoin reaches three-week high after softer US wholesale inflation data

Bitcoin climbed to $65,500 on Wednesday, its highest level since June 22, after another US inflation report came in cooler than expected. For everyday investors, the move shows how closely crypto is still trading with broader “risk assets,” a label for investments that tend to benefit when markets expect easier financial conditions.

TradingView data cited by Cointelegraph showed BTC/USD reaching the three-week high after the Bureau of Labor Statistics released June figures for the Producer Price Index, or PPI. PPI tracks prices received by producers and is watched as an early signal for inflation pressures before they reach consumers.

The BLS said PPI rose 5.5% from a year earlier and fell 0.3% on the month. In its release, the agency said the monthly decline came from a 1.4% drop in final demand goods prices, while final demand services increased 0.2%.

Why inflation data moved bitcoin

Lower inflation readings can change how investors view the Federal Reserve’s next interest-rate decision. Higher rates can pressure speculative assets by making safer yield-bearing assets more attractive and by tightening financial conditions. Softer inflation can have the opposite effect if traders believe the Fed has less reason to keep raising rates.

Economist Mohamed El-Erian wrote on X that the PPI figures were “much better-than-expected” and said they were likely to support equities while reducing market expectations for further interest-rate increases.

The PPI report followed Tuesday’s Consumer Price Index release, which also came in below expectations, according to Cointelegraph. CPI measures prices paid by consumers. Cointelegraph reported that the softer CPI arrived despite pressure tied to the US-Iran war and its effect on oil prices.

The Kobeissi Letter, a trading and markets commentary account, said on X that inflation expectations continued to decline, citing interest-rate-hike bets from users of prediction platform Polymarket.

CME Group’s FedWatch Tool also showed a shift in expectations for the Fed’s September meeting. According to Cointelegraph, a 0.25 percentage-point rate increase was no longer the most likely outcome shown by the tool.

Traders watch nearby bitcoin levels

Market commentators were still cautious about whether bitcoin could extend the move. Trader Daan Crypto Trades wrote on X that liquidity was sitting above the market near $65,600 and $67,200. In this context, liquidity refers to clusters of buy or sell orders on exchange order books that can affect short-term price action.

Daan said a move above $67,200 would make the advance larger and could put the $70,000-plus area back in focus, while positioning bitcoin in the middle of a $60,000 to $80,000 range.

Trader and analyst Rekt Capital pointed to bitcoin approaching its 50-month exponential moving average, or EMA. An EMA is a trend line that gives more weight to recent prices. Cointelegraph reported that, if prior bear-market behavior were to repeat, that level could act as resistance.

Another trader, Killa, said on X that if bitcoin followed the same statistical pattern seen over the past 12 months, it would likely reduce risk for the rest of the month and move lower.

Bitcoin was quoted at $65,319.45, up 1.64%, in market data shown by Cointelegraph. Ether was listed at $1,927.56, up 2.61%, while several other major tokens also traded higher on the day.

This story draws on original reporting from Cointelegraph.