Preview: "Bitcoin dropped sharply after a higher-than-expected US PPI print shocked traders."
Key takeaways:
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Bitcoin drops below $118,000 after a hot US PPI print fueled inflation concerns.
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Federal Reserve interest rate cut odds dropped to 90.5% from 99.8%.
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Double top signals and short-term pullbacks in BTC price give altcoins room to rally.
Bitcoin
has pulled back sharply from its fresh all-time high of $123,400, dropping to $117,400 on Thursday. The correction took place as a hotter-than-expected US Producer Price Index (PPI) data surprised the market.
The latest PPI print showed annual headline inflation at 3.3%, well above the 2.5% forecast and the 2.3% reading from the previous month. This is the largest monthly rise in US PPI since June 2022. The stronger price pressures stand in stark contrast to cooler July Consumer Price Index (CPI) data on Tuesday, which outlined headline inflation holding at 2.7% year-over-year and core CPI at 3.1%, reinforcing a bullish case for risk assets at the time.
While CPI data fueled optimism for a near-term interest rate cut, the hotter PPI release complicates that narrative. Higher-than-expected producer prices signal persistent inflationary pressures, potentially forcing the Federal Reserve to delay monetary easing. For Bitcoin, this could limit upside momentum in the short term.
Data from CME FedWatch still points to a 90.5% probability of a 0.25% rate cut on Sept. 17, although it’s notable that the likelihood had spiked to 99.8% on Wednesday.
Related: Bitcoin's new record high has traders asking: Did BTC price top at $124K?
Key levels to watch for Bitcoin
While BTC corrections were accelerated due to the hot US PPI print, bearish signals were observed earlier. Cointelegraph noted a bearish divergence between price and relative strength index or RSI, after BTC tagged new highs above $123,000, possibly leading to liquidity grab from its previous highs. The immediate price dip also formed a swing pattern failure, outlining possible choppy price action for the next few days.
From a technical standpoint, Bitcoin’s recent leveraged unwind has absorbed key internal liquidity zones between $119,000 and $117,500. Currently, the most likely scenario could be a period of sideways consolidation following an 11% rise over the past 12 days.
A bullish case would require a decisive close above $120,000 on the four-hour chart. However, the probability of a retest below $117,000 has increased due to a long-term market fractal pattern.
On the three-day chart, BTC has formed a double top pattern, a structure previously observed during January. The pattern led to a period of corrections during Q1 2025, during which BTC dropped as low as $75,000.
If Bitcoin maintains support above $112,000, altcoins could thrive in a consolidation-driven setup. A drop below $112,000, however, would signal a shift in the lower time frame market structure, potentially triggering corrections toward lower areas of interest between $105,000 and $110,000.
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