The release of hotter-than-expected US Producer Price Index (PPI) data for January 2026 has triggered a wave of risk-off sentiment in financial markets, putting significant downward pressure on Bitcoin and other cryptocurrencies while boosting traditional safe-haven assets like gold.
The key inflation metrics significantly overshot analyst forecasts: The monthly Core PPI surged to 0.8% against an expectation of 0.3%, while the headline monthly PPI came in at 0.5% versus the anticipated 0.3%. On an annual basis, Core PPI rose to 3.6% (expected 3.0%) and headline PPI hit 2.9% (expected 2.6%). This data, published by the US Bureau of Labor Statistics (BLS), indicates persistent inflationary pressures in the service sector, with the agency noting the January increase was "traced to a 0.8-percent advance in the index for final demand services."
The immediate market reaction was stark. Bitcoin (BTC) slid nearly 2.5% on the Bitstamp exchange following the data release, threatening a breakdown below the crucial $65,000 support level. Analysts, including crypto trader Michaël van de Poppe, warned of a potential "massive collapse" similar to the sell-off in early February that saw BTC/USD touch 15-month lows near $59,000. Van de Poppe emphasized that holding the $65,000 level was critical to avoid a deeper correction.
Conversely, traditional safe havens rallied. Gold (XAU) surpassed $5,200 per ounce, reaching its highest level since late January, while silver (XAG) revisited $92. This divergence highlights a classic flight from risk assets amid renewed inflation concerns.
The data has dramatically altered market expectations for Federal Reserve monetary policy. According to the CME Group's FedWatch Tool, the probability of an interest rate cut at the Fed's March meeting plummeted to below 4%. This shift dashes hopes for imminent policy easing that investors had been banking on, with many previously expecting two rate cuts in 2026.
The inflationary print compounds existing market anxieties, which were already elevated due to stalled progress in US-Iran talks, keeping geopolitical risk concerns alive. For Bitcoin, the monthly performance remains deeply negative, with losses nearing 17% month-to-date. The cryptocurrency is also on track for its fifth consecutive month of losses—a pattern not seen since 2018—as it struggles to reclaim key technical resistances like the 200-week exponential moving average and the old all-time high zone around $69,000.
