Bitcoin pushed back above $65,000 and Ethereum topped $1,900 on Thursday after U.S. producer prices fell for the first time in nearly a year. The 0.3% monthly drop in the Producer Price Index — the sharpest since April 2025 — sent a wave of relief through risk assets and triggered a short squeeze that wiped out nearly $100 million in crypto positions within half an hour.
PPI drop fuels rate-cut bets
Headline PPI came in at 5.5% year-over-year, well below the 6.2% consensus. Core PPI, which strips out food and energy, hit 4.7% against a 5.2% forecast. May's monthly rise was also revised down from 1.1% to 0.6%. The data follows Wednesday's cooler-than-expected CPI print, giving the Fed back-to-back inflation misses to chew on.
Markets quickly repriced rate expectations. The implied probability of a July rate hike fell to 12.3% from 31% a week earlier. Traders now see an 87.7% chance the Fed holds rates at 3.50%-3.75% when it meets later this month. Fed Chair Kevin Warsh told Congress the central bank has 'no tolerance for persistently elevated inflation,' but the PPI numbers suggest price pressures may finally be easing.
Short squeeze hits $100M
The reaction in crypto was immediate. Within 30 minutes of the release, nearly $100 million in leveraged short positions were liquidated across major exchanges. Bitcoin jumped 2.5% in 24 hours to trade near $65,256; Ethereum rose 3.6% to $1,930. The move echoed a similar squeeze in early July, when weak jobs data pushed Bitcoin to the $62,000 area.
The broader market has added roughly $250 billion in market cap in the first 15 days of July. But the rally's foundation may be less solid than it looks.
The gasoline caveat
Energy drove the PPI decline. Gasoline prices fell 12% in June, accounting for nearly two-thirds of the 1.4% slide in final demand goods. That's a big swing, but gasoline remains nearly 43% higher than a year ago. And the relief may be short-lived: oil has pushed above $85 after President Trump announced a blockade of the Strait of Hormuz, a chokepoint that carries about one-fifth of the world's oil supply.
Services trade margins, a stickier component, actually rose 0.4% in June. If energy prices reverse, the PPI could snap back quickly.
Bitcoin's next hurdle
For Bitcoin, the immediate test is the $66,000 resistance zone — a level that has capped gains since mid-June. The PPI-fueled surge brought it close, but it hasn't broken through yet. With oil geopolitics heating up and the Fed still wary, the next few days will show whether this rally has legs or is just another short-squeeze flash in the pan.
