Bitcoin Skyrockets Past $114K Thanks to Cool US Inflation-Fed’s Next Move?

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Key takeaways:

  • Bitcoin pirouetted past $114,000 as August’s PPI inflation decided to play nice.

  • Traders are whispering sweet nothings that the Fed might just cut rates in September-how charming!

  • Long-term onchain trends? Think of it as a drama: a bout of chaos, then the grand finale with upside aplenty.

Bitcoin (BTC), that mercurial child of the financial ball, sashayed above $114,000 for the first time since August 24, courtesy of US inflation data that chilled out like a recluse at a garden party. The Producer Price Index (PPI) for August flirted with a mere 2.6% year-over-year-quite the departure from the dreaded 3.3% forecast. And the so-called “Core PPI,” that grim accountant who ignores food and energy, rather coyly dropped to 2.8%, leaving economists clutching their pearls at the previously expected 3.5%.

On the monthly scale, PPI took a little tumble into the negatives-only the second time since March 2024, mind you-according to our dear friends at the Kobeissi newsletter. July’s inflation figures were given a modest makeover downward as well, with headline PPI downsized from 3.4% to 3.1%, and its more refined cousin, Core PPI, trimmed from 3.7% to 3.4%. Toss in the week’s stunning jobs data revision wiping out 911,000 jobs-poof!-and the markets are practically throwing rate cuts a ticker-tape parade.

The ever-wise Market analyst Skew pointed out that producer inflation is like that friend who’s always a little behind the times; PPI lags the Consumer Price Index (CPI) by one to three months. So while CPI might still be stubbornly sticky like treacle, the grander scheme hints at a cooling inflation soirée by Q4. Encouraging? Absolutely. But expect hedge funds to linger with their caution tape until CPI takes a more elegant bow.

Bitcoin’s historical pas de deux with Fed rate cuts

Should the Fed indeed cut rates-a rather likely encore-Bitcoin’s past performances suggest a predictable ballet: a flurry of jittery moves before pirouetting upwards. Enter two fascinating characters: Market Value to Realized Value (MVRV) and the Whale Ratio, each telling their tales with panache.

MVRV is the financier’s equivalent of peeking behind the curtain, comparing Bitcoin’s market cap with the realized cap-the latter being the value at which coins last danced among owners. When MVRV hovers around 1, BTC is the belle of the ball, undervalued; teetering near 3 or 4, and she’s clearly overdressed for the occasion.

Meanwhile, the Whale Ratio tracks the large holders-those gargantuan beasts of the ocean-and their tendencies to either offer their coins for sale or tuck them away in their vaults, perhaps dreaming of yachts.

CryptoQuant’s data drama reveals a classic scene from March 2020: rate cuts sent MVRV plummeting toward 1 as panic-stricken investors fled stage left, while whales made a dramatic exit by unloading coins in a flurry. Yet, as liquidity pirouetted back in, MVRV rebounded and the whales, ever the connoisseurs, began hoarding again-thus igniting the legendary 2020-2021 bull run.

A déjà vu arrived in late 2024 with a similar pattern: short-term selling followed by steadfast accumulation, setting the stage for yet another encore rally.

If history has a flair for the theatrical, then Fed easing in 2025 shall bring its expected opening frenzy followed by a glorious liquidity waltz, potentially ushering Bitcoin towards dizzying new heights. Bravo, Bitcoin, bravo! 🎭💰

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2025-09-10 19:04