US PPI data shows inflation stickiness again, Bitcoin plunges nearly 6% intraday

U.S. stocks and crypto markets retreated on March 14 after another set of inflation data came in higher than expected.

The U.S. producer price index (PPI) rose 0.6% month-on-month in February, higher than the 0.3% expected by economists. Sticky inflation seemed to dampen investors' hopes that the time for a rate cut is coming, and major U.S. stock indexes fell. The S&P 500 fell 0.3%, the Dow Jones Industrial Average fell 0.4%, and the tech-heavy Nasdaq Composite fell 0.3%.

The crypto market fluctuated downward, with Bitcoin approaching $73,800 on Thursday morning. It plunged more than 6% after the release of economic data and fell below $69,000 at one point . Buying then stepped in to drive a rebound, and as of press time, it rebounded to around $70,500.

Several analysts have noted that Bitcoin could enter a period of consolidation, even with the potential for a 20% correction, as the momentum from the past two weeks of setting new highs begins to wane.

Mainstream altcoins Ethereum , XRP , MATIC and AVAX fell 5%-7% during today's trading, and have recovered some of their losses as of press time.

Solana ’s native token (SOL) performed strongly amid the market downturn, hitting its highest price in 26 months before the correction. SOL rose 5% throughout the day, reaching an intraday high of $173.81, becoming one of the best performing assets among the top ten cryptocurrencies.

Digital asset hedge fund QCP Capital said in a market update on Thursday that SOL has benefited from capital rotation as bitcoin’s rally appears to have stalled.

Cryptocurrency trader Bob Loukas expects SOL to rise further to $250 now that it has broken through a key resistance level.

Meanwhile, Dogecoin rose nearly 10% after Elon Musk hinted that Tesla is willing to add Dogecoin as an official payment method.

Are macro risks returning to the market?

Investors have been keeping a close eye on inflation lately, and this week’s data appeared to influence their expectations for when and how often the Federal Reserve will cut interest rates this year.

Earlier this week, the Consumer Price Index (CPI) also came in above expectations, with annual inflation rising to 3.2% and the core interest rate rising to 3.8%.

The 10-year Treasury yield, which fell below 4% earlier this month, has now risen to 4.30%. Meanwhile, the dollar has broken out of a downward trend that began in mid-February and has risen about 1% over the past week, including a 0.5% gain on Thursday.

All else being equal, rising interest rates and a stronger dollar tend to have a negative impact on risk assets like Bitcoin.

Financial commentator Tedtalksmacro predicted on X that the Fed will keep interest rates "higher for longer" on the basis of data support. But he also said: "I think macroeconomics is secondary to institutional flows as a driver of the current market."

The next meeting of the Federal Open Market Committee (FOMC) is scheduled for March 20, and no rate cut is expected.

As of this writing, there is only a 6.2% chance of a May FOMC rate cut, and less than a 60% chance of a June rate cut, according to the latest estimates from the CME FedWatch tool.