Bitcoin drops 3% as inflation hots up again, and a quiet services spike just changed the rate cut story

Bitcoin drops 3% as PPI beats forecasts, and a tiny detail could skew the next macro trade

Bitcoin traded lower after January producer inflation came in above consensus. That sets up a longer stretch in which rate expectations may steer crypto pricing ahead of the next producer price index (PPI) print on March 18.

January PPI inflation was 2.9% year over year, above the 2.6% consensus estimate. Core PPI (excluding food and energy) at 3.6% year over year versus 3.0% consensus.

The Bureau of Labor Statistics reported the PPI for final demand rose 0.5% month over month on a seasonally adjusted basis and 2.9% year over year on an unadjusted basis.

According to the BLS release, the upside in January was concentrated in services, while goods and energy moved lower. Final demand services increased 0.8% on the month, and within services, trade-service margins rose 2.5% (trade indexes measure margins received by wholesalers and retailers).

Final demand goods fell 0.3%. Energy prices dropped 2.7%, including a 5.5% decline in gasoline.

PPI surprise follows a cooler CPI print

The producer-side surprise landed after consumer inflation had cooled earlier in the month. The BLS said January CPI rose 2.4% year over year, down from 2.7% in December, while core CPI (all items less food and energy) rose 2.5% year over year.

The combination leaves markets parsing whether January’s producer-side heat, concentrated in services and margins, can persist without showing up in consumer prices over coming prints. CryptoSlate previously covered the CPI-side move in January CPI details and Bitcoin reaction.

Crypto markets have tended to react to shifts in U.S. rate expectations because those shifts can change discount rates and broad liquidity conditions. Traders often apply that framework when inflation surprises run hot or cold.

That macro transmission is not spelled out in government releases, yet the timing mattered for price action in the hours around the data, where BTC fell from $68,289 to $66,255.

That move amounts to a drop of about 3% across roughly 36 hours. In parallel, CryptoSlate has noted how positioning can amplify macro moves, including in coverage of liquidations and ETF flows.

Rates, yields, and inflation expectations in focus

For policy context, the Federal Reserve’s current implementation directive is to maintain the federal funds rate target range at 3.50%–3.75%, effective Jan. 29.

The effective federal funds rate printed at 3.64% on Feb. 23, according to FRED’s DFF series. That kept realized overnight funding near the middle of the target range.

A separate expectations anchor from FRED put the 10-year breakeven inflation rate at 2.34% on Feb. 6. The series is tracked in FRED’s 10-year breakeven inflation data, which traders often use to contextualize long-run inflation pricing even when short-run prints fluctuate.

Other macro benchmarks can shape cross-asset sensitivity around inflation data. These include the 10-year Treasury yield in FRED’s DGS10 series and the Fed’s nominal broad dollar index.

Calendar delay raises the stakes for March 18

One technical wrinkle is that the next producer inflation catalyst will arrive later than usual. The BLS said the February 2026 PPI news release is rescheduled for March 18, 2026, citing shutdown-related transmission delays.

The agency’s calendar reflects that date on its PPI release schedule. That delay extends the window in which markets may trade the interaction between already-published CPI cooling and the new PPI services strength, with fewer near-term producer-price checkpoints to resolve the debate.

How “core PPI” is defined will matter in those discussions. The BLS reported that final demand less foods, energy, and trade services rose 3.4% year over year, a measure that strips out trade-service margins that were a key driver of January’s monthly gain.

Media shorthand often cites a different “core” measure, excluding just food and energy, which is at 3.6% year over year. Traders who treat those as interchangeable risk misreading what portion of January’s strength came from margins versus broader pricing pressure.

In the coming two to eight weeks:

1. One baseline setup is that the Fed stays on hold while the market pushes expected cuts further out rather than pulling them forward. In that framing, bitcoin’s sensitivity to macro data can remain elevated into March 18.
2. A second path is a more hawkish repricing if investors interpret the services and margin spike as persistent. That approach would keep attention on short-dated rates and on whether long-run inflation pricing, anchored around 2.34% in the Feb. 6 breakeven reading, remains contained.
3. A third path is a dovish re-lean if upcoming data outside this pack shift attention toward softer growth while CPI continues to cool. That would allow the market to discount the PPI services burst as sector-specific rather than broad.

For now, the calendar itself is part of the trade. With February PPI delayed until March 18, bitcoin and other risk assets are left to reconcile a January inflation mix where consumer prices cooled to 2.4% year over year even as producer prices advanced 0.5% on the month, powered by services and trade margins.

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