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Market Update: Why Bitcoin and Ethereum Are Correcting

Thursday morning Bitcoin touched the $124,000 mark for the first time, but the party didn’t last long.

By Mike Hesp
• 2 min read
Market Update: Why Bitcoin and Ethereum Are Correcting

Thursday morning Bitcoin touched the $124,000 mark for the first time, but the party didn’t last long. In the overnight into Friday the price temporarily fell to $117,500, a 5.2 percent drop in a short span. Two unexpected events hit Bitcoin and the rest of the crypto market hard.

First, the US Producer Price Index (PPI) caused a stir. Year-over-year producer inflation came in at 3.3 percent, a full 0.8 percentage points higher than forecast. This points to persistent inflation pressure and could push Fed Chair Jerome Powell to delay planned rate cuts. Less liquidity in the market means less capital for Bitcoin and altcoins in the short term.

On top of that came a political signal that surprised investors. US Treasury Secretary Scott Bessent put an end to the expectation that the US would actively buy Bitcoin. Only “seized assets” would be used to replenish the national reserve. A nuance followed: budget-neutral purchase methods are now being explored.

At the time of writing, Bitcoin trades around $119,100 and is showing early signs of a rebound. Ethereum sits at $4,640, down 2.1 percent versus yesterday.

Unlike Bitcoin, Ether tailwind from inflows into spot ETFs, totaling $120 million. On Monday Ethereum breached the $1 billion mark in ETF inflows. Fueled by these funds and rising demand from crypto treasury firms like BitMine and SharpLink, the number two by market cap has more than doubled since the end of June.

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