Bitcoin Falls to $65K as Hot PPI Data Dims Fed Rate Cut Hopes

The cryptocurrency market experienced a sharp downturn as Bitcoin retreated to $65,253, erasing recent gains after failing to maintain momentum above the critical $70,000 resistance level. The broader market capitalization declined approximately 2% to $2.27 trillion, with major digital assets following the flagship cryptocurrency lower.

Inflation Data Sparks Market Retreat

The primary catalyst for the selloff was the release of January's U.S. Producer Price Index (PPI) data, which exceeded market expectations. The PPI registered 2.9% year-over-year, surpassing the consensus forecast of 2.6%. Even more concerning for crypto bulls, the Core PPI climbed to 3.6%, also above analyst predictions.

These elevated inflation figures suggest persistent price pressures in the economy, significantly diminishing expectations for imminent Federal Reserve interest rate reductions. In the current macroeconomic environment, higher interest rates typically enhance the appeal of traditional safe-haven assets like government bonds, diverting capital away from riskier investments including digital currencies.

Widespread Liquidations Intensify Decline

The rapid price movement triggered substantial liquidations across cryptocurrency exchanges. Over 96,000 traders were liquidated within a 24-hour period, with total liquidation values approaching $260 million. Notably, approximately 70% of these liquidations affected long positions, indicating that traders who had wagered on continued price appreciation were forced to exit their positions.

Bitcoin alone accounted for roughly $90 million in liquidations, while Ethereum registered approximately $86.5 million in forced closures. This cascade of liquidations amplified the downward price pressure across the market.

Historic February Losses Mount

The recent decline has completely reversed gains Bitcoin achieved on February 26, when the cryptocurrency briefly approached $70,000. As the month draws to a close, Bitcoin is posting a decline of nearly 16.75% for February, following a 10% loss in January.

This represents an unprecedented occurrence in Bitcoin's trading history—the first time both January and February have concluded with negative returns in consecutive fashion. If the digital asset breaks below $62,553, analysts warn it could retest the recent four-week low near $60,000.

However, some observers note a potentially bullish historical pattern: Bitcoin has frequently established price bottoms approximately 23 months following its previous all-time high, a timeframe that corresponds with the current market position.

Altcoin Market Mirrors Bitcoin Weakness

Ethereum, the second-largest cryptocurrency by market capitalization, declined 4-5.7% over the past 24 hours after failing to breach its recent four-week high. The asset has struggled to sustain upward momentum amid broader market headwinds.

Major alternative cryptocurrencies experienced even steeper corrections. XRP, Solana, Dogecoin, and Bitcoin Cash recorded losses ranging between 5% and 18%, underscoring the market-wide nature of the selloff. The altcoin sector continues to demonstrate high correlation with Bitcoin's price action, amplifying volatility during periods of market stress.

Coinasity's Take

The cryptocurrency market faces a challenging macroeconomic environment as persistent inflation data continues to complicate the Federal Reserve's policy trajectory. The failure to sustain prices above key resistance levels, combined with historic consecutive monthly losses, suggests continued near-term volatility. However, the 23-month cycle pattern and heavy liquidation of leveraged long positions may indicate capitulation that historically precedes recovery phases. Traders should monitor the critical $62,553 support level while remaining cognizant that rate policy expectations will likely drive market direction in the coming weeks.